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FILED
JUL
10 2008
Judge
Blanche M. Manning
United States District Court
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
JAY H. SOLED,
Defendant.
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Filed: July 10, 2008
No. 08 CR-464
Judge Blanche M. Manning
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PLEA AGREEMENT PURSUANT TO FED. R. CRIM. P. 11(c)(1)(B)
The United States of America and Jay H. Soled ("defendant") hereby
enter into the following Plea Agreement pursuant to Rule 11(c)(1)(B)
of the Federal Rules of Criminal Procedure (Fed. R. Crim. P.):
RIGHTS OF DEFENDANT
- The defendant understands his rights:
- to be represented by an attorney;
- to be charged by indictment;
- to plead not guilty to any criminal charge brought against him;
- to have a trial by jury, at which he would be presumed not guilty
of the charge and the United States would have to prove every
essential element of the charged offense beyond a reasonable doubt
for him to be found guilty;
- to confront and cross-examine witnesses against him and to
subpoena witnesses in his defense at trial;
- not to be compelled to incriminate himself;
- to appeal his conviction, if he is found guilty; and
- to appeal the imposition of sentence against him.
AGREEMENT TO PLEAD GUILTY
AND WAIVE CERTAIN RIGHTS
- The defendant knowingly and voluntarily waives the rights set out
in Paragraph 1(b)-(g) above. The defendant also knowingly and voluntarily
waives the right to file any appeal, any collateral attack, or any
other writ or motion, including but not limited to, an appeal under
18 U.S.C. § 3742 or a motion under 28 U.S.C. § 2241 or 2255
that challenges the sentence imposed by the Court, regardless of how
the sentence is determined by the Court, unless the sentence imposed
exceeds the sentencing range of Guideline Level 18 (27 to 33 months).
This agreement does not affect the rights or obligations of the United
States as set forth in 18 U.S.C. § 3742(b)-(c). Pursuant to Fed.
R. Crim. P. 7(b), the defendant will waive indictment and plead guilty
at arraignment to a one-count Information to be filed in the United
States District Court for the District of Kansas. The Information
will charge the defendant with one count of knowingly and intentionally
conspiring with others to commit offenses against the United States
from Fall 1999 to at least November 2003, namely
- to defraud and obtain money from the E-Rate Program, administered
by the Schools and Libraries Division ("SLD") of the Universal
Service Administrative Company ("USAC"), through materially false
representations, and the concealment of material facts, by depositing
and causing to be deposited matters and things to be sent to SLD
by United States Mail and by a private and commercial interstate
carrier, namely Airborne Express;
- to defraud and obtain money from the E-Rate Program, administered
by SLD and USAC, through materially false representations and
the concealment of material facts, by transmitting and causing
to be transmitted by wire matters and things to be sent to SLD
by interstate electronic mail, telephone, and facsimile, and
- to defraud and obtain money from the E-Rate Program, administered
by SLD and USAC, through intentional manipulation of the competitive
bidding process at schools seeking E-Rate funding, submission
of materially false representations to SLD and USAC, concealment
of material facts from SLD and USAC, and forgery of the signatures
of the officials representing schools seeking E-Rate funding,
in violation of 18 U.S.C. § 371.
- The parties agree to file a motion with this Court pursuant to Fed.
R. Crim. P. 20 to transfer this case to the Northern District of Illinois
for the purpose of entering a guilty plea and sentencing after this
Plea Agreement has been filed. The defendant, pursuant to the terms
of this Plea Agreement, will plead guilty to the criminal charge described
in Paragraph 2 above and will make a factual admission of guilt to
the Court in accordance with Fed. R. Crim. P. 11, as set forth in
Paragraph 4 below. The United States agrees that at the arraignment,
it will stipulate to the release of the defendant on his personal
recognizance, pursuant to 18 U.S.C. § 3142, pending the
sentencing hearing in this case.
FACTUAL BASIS FOR OFFENSES CHARGED
- Had this case gone to trial, the United States would have presented
evidence sufficient to prove the following facts:
- For purposes of this Plea Agreement, the "relevant period" is
that period from Fall 1999 to at least November, 2003. During
the relevant period, the defendant was the Vice President and
co-owner of Corporation 1, an unindicted co-conspirator company,
organized and existing under the laws of New York and with its
principal place of business in New Jersey. During the relevant
period Corporation 1 was a seller and installer of computers and
associated equipment used for connection to the Internet and for
the distribution of information across local area networks, and
was engaged in the sale and installation of those products in
the United States.
- During the relevant period, the defendant participated in a
conspiracy with other persons and entities, including persons
and companies outside Corporation 1, engaged in the sale and installation
of computers and associated equipment used for connection to the
Internet and for the distribution of information across local
area networks. The primary purpose of the conspiracy was to fraudulently
obtain the award of school technology grants under the E-Rate
Program, and payment from USAC for products and services for schools
that were awarded grants. The conspiracy was comprised of two
closely-related schemes that were orchestrated and completed by
the defendant and his coconspirators in furtherance of the overall
conspiracy. This first scheme involved, among others, the following
schools:
- Aurora Weier Bilingual High School
- Brenda Pijoos School
- Calvary Chapel Academy
- College Preparatory School of America
- Cornerstone Achievement Academy
- Islamic Academy Day School
- Islamic School of Lawrence
- Mohammed School
- New Horizon School
- River Run Education and Transition Training
The defendant and his co-conspirators carried out this scheme
by agreeing to engage in and engaging in wire fraud, mail fraud,
and making false statements to USAC. In furtherance of this
scheme an unindicted co-conspirator company wholly owned and
controlled by one of the defendant's unnamed co-conspirators,
in violation of the federal regulations governing the E-Rate
Program, held itself out as an independent consultant that offered
assistance to the applicant schools in obtaining E-Rate funding
and choosing service providers. This corporation steered the
award of E-Rate contracts to the defendant's company, Corporation
1, and its co-conspirators. The defendant and his co-conspirators
induced the schools affected by this scheme to enter into contracts
by offering to fund or "forgive" the schools' co-pay amounts,
a violation of the federal regulations governing the E-Rate
Program. During meetings and conversations between the defendant
and his co-conspirators, agreements were reached to circumvent
the requirements of the E-Rate Program by providing the schools
seeking funding with false promises that the defendant and/or
his co-conspirators would locate private donors to assist the
schools in paying their co-pays under the E-Rate Program, and
making materially false representations to USAC in the schools'
application forms for E-Rate Program funding. The defendant
and his co-conspirators engaged in acts to conceal their fraud
from USAC and the affected schools by making false statements
to USAC and, in some instances, inducing the schools' representatives
to provide USAC information that the conspirators knew to be
false.
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During the relevant period, as part of the overall conspiracy,
the defendant also engaged in a scheme with another employee
and officer of Corporation 1, to obtain the award of school
technology grants funded under the E-Rate Program at, among
others, the following schools:
- John A. Reisenbach Charter School
- Newark Charter School, and
- Pioneer Youth Corps of Oregon
The defendant and his co-conspirator carried out this part of
the conspiracy by agreeing to engage in and engaging in wire fraud,
mail fraud, and making false statements to USAC. The defendant
participated in this scheme, the primary purpose of which was
to fraudulently obtain the award of school technology grants under
the E-Rate Program, along with other persons and entities employed
by or otherwise associated with Corporation 1. In furtherance
of this scheme, the defendant and his co-conspirator provided
false and misleading information to USAC by preparing and forwarding
USAC forms, technology plans, budgets and other paperwork for
the applicant schools. The defendant and his co-conspirator agreed
to and actually did induce the schools affected by this scheme
to enter into contracts for products and services funded by the
E-Rate Program by representing to the schools that they would
not be responsible for paying their co-pays, a violation of the
federal regulations governing the E-Rate Program. In one instance,
the conspirators offered to solicit benefactors who would pay
the co-pay, knowing that such benefactors did not actually exist.
The defendant and his co-conspirator engaged in acts to conceal
their fraud from USAC and the affected schools by making false
statements to USAC. In one instance, when a school pressed the
defendant and his co-conspirator for their assistance in obtaining
funds to pay for its co-pay, the defendant and his co-conspirator,
in order to conceal their fraud and misrepresentations to the
school, engaged in deliberate deception of the school by forwarding
funds to the affected school, after the conspirators had obtained
payment from USAC for their work at this school, in a manner intended
to cause the school to believe that the source of the funds was
a third-party benefactor.
- The E-Rate Program is a federally funded program and the money
obtained by the conspirators, as a result of the illegal acts
to which they are pleading guilty, constituted federal funds.
The defendant, in furtherance of the conspiracy to which he is
pleading guilty deposited or caused to be deposited matters and
things to be sent to USAC by United States Mail and by a private
and commercial interstate carrier, namely Airborne Express. The
defendant, in furtherance of the illegal acts to which he is pleading
guilty, also transmitted and caused to be transmitted across state
lines by wire, information, matters and things to be sent to USAC
by electronic mail, telephone, and facsimile.
- Acts in furtherance of the conspiracy were carried out within
the District of Kansas and elsewhere. Some unindicted co-conspirators
of the defendant conducted business operations in the District
of Kansas, from which location they sent and received facsimile
transmissions and electronic mail messages across state lines,
and mailed correspondence, in furtherance of the conspiracy. Further,
the USAC office to which the conspirators sent many of the false
and fraudulent forms that were created to carry out and conceal
the conspiracies was located in the District of Kansas.
POSSIBLE MAXIMUM SENTENCE
- The defendant understands that the statutory maximum penalty which
may be imposed against him upon conviction for a violation of 18 U.S.C.
§ 371 is:
- a term of imprisonment for five years; and
- a fine in an amount equal to the greatest of (1) $250,000, (2)
twice the gross pecuniary gain the conspirators derived from the
crime, or (3) twice the gross pecuniary loss caused to the victims
of the crime by the conspirators (18 U.S.C. § 371; 18 U.S.C.
§ 3571(b) and (d)).
- In addition, the defendant understands that:
- pursuant to U.S.S.G. §5E1.1 or 18 U.S.C. § 3663(a)(3)
or 3583(d), the Court may order him to pay restitution to the
victims of the offense; and
- pursuant to 18 U.S.C. § 3013(a)(2)(A), the Court is required
to order the defendant to pay a $100.00 special assessment upon
conviction for the charged crime.
SENTENCING GUIDELINES
- The defendant understands that the Sentencing Guidelines are advisory,
not mandatory, but that the Court must consider the Guidelines in
effect on the day of sentencing, along with the other factors set
forth in 18 U.S.C. § 3553(a), in determining and imposing sentence.
The defendant understands that the Guidelines determinations will
be made by the Court by a preponderance of the evidence standard.
The defendant understands that although the Court is not ultimately
bound to impose a sentence within the applicable Guidelines range,
its sentence must be reasonable based upon consideration of all relevant
sentencing factors set forth in 18 U.S.C. § 3553(a). Pursuant
to U.S.S.G. §1B1.8, the United States agrees that self-incriminating
information that the defendant provides to the United States pursuant
to this Plea Agreement will not be used to increase the volume of
affected commerce attributable to the defendant or in determining
the defendant's applicable Guidelines range, except to the extent
provided in U.S.S.G. §1B1.8(b).
- The United States and the defendant agree that the proper Guidelines
calculation is as follows:
- The base offense level under U.S.S.G. §2B1.1(a)(2) is 6;
- The combined loss and intended loss to the victim or victims
of the offense was greater than $1,000,000 and less than $2,500,000,
resulting in an increase in the offense under U.S.S.G. §2B1.1(b)(1)(I)
of 16;
- The defendant was a manager or supervisor of a criminal activity
that involved five or more participants and was extensive in nature,
resulting in an increase for his role in the offenses under U.S.S.G.
3B1.1(b) of 3; and
- The defendant has demonstrated acceptance of responsibility
for his offenses under U.S.S.G. 3E1.1(b) by entering a plea of
guilty to the Information, resulting in a decrease in his offense
level of 3.
Thus, the defendant's Final Offense Level is 22. Given the defendant's
lack of previous convictions, the proper Criminal History Category
for determining the appropriate Guidelines range of imprisonment is
Category I, resulting in a Guidelines range of punishment of 41 to
51 months of imprisonment.
SENTENCING AGREEMENT
- The United States agrees that it will recommend, as an appropriate
disposition of this case, that the Court impose a period of imprisonment
within the range (27 to 33 months) for a Final Offense Level of 18
under the Sentencing Guidelines, reflecting a four-point downward
departure, as described in Paragraph 10 below. The defendant is free
to recommend, as the appropriate disposition of the case, a sentence
below the applicable Guidelines range based on 18 U.S.C. § 3553(a).
The defendant understands that the United States will oppose the defendant's
recommendation. The parties agree that there exists no aggravating
or mitigating circumstance of a kind, or to a degree, not adequately
taken into consideration by the U.S. Sentencing Commission in formulating
the Sentencing Guidelines, justifying a departure pursuant to U.S.S.G.
§5K2.0, except that the defendant is free to argue that the loss
calculation pursuant to the Guidelines overstates the seriousness
of the offense. The defendant understands that the United States will
maintain that the Guidelines loss calculation appropriately measures
the seriousness of the offense. The United States agrees not to seek
or support any term of imprisonment outside of the Guidelines range
of 27 to 33 months, and both parties agree that they will not seek
or support any Guidelines adjustment for any reason that is not set
forth in this Plea Agreement. The parties each reserve the right to
argue for the amount of restitution and fine they believe is appropriate
and consistent with the Sentencing Guidelines, understanding that
the United States may argue for a fine up to that provided for under
the alternative fine provision of 18 U.S.C. § 3571(d).
- The parties agree that had this case gone to trial, the United
States would have presented evidence to prove that the total actual
and intended gain derived from or the loss resulting from the
charged offense is $1,267,020, and therefore the maximum fine
pursuant to 18 U.S.C. § 3571(d) would be $2,534,040. For
purposes of this plea and sentencing only, the defendant waives
his rights to contest this calculation.
- The defendant understands that the Court will order him to pay
a $100 special assessment pursuant to 18 U.S.C. § 3013(a)(2)(A)
in addition to any fine imposed.
- Subject to the full and continuing cooperation of the defendant,
as described in Paragraphs 12 and 13 of this Plea Agreement, and prior
to sentencing in this case, the United States agrees that it will
make a motion, pursuant to U.S.S.G. §5K1.1, for a four-point
downward departure from the Guidelines Final Offense Level in this
case and will request that the Court impose a term of imprisonment
within that called for by the Sentencing Guidelines for a Final Offense
Level of 18 because of the defendant's substantial assistance in the
government's investigation and prosecution of violations of federal
criminal law in the E-Rate services industry.
- Subject to the ongoing, full, and truthful cooperation of the defendant
described in Paragraphs 12 and 13 of this Plea Agreement, and before
sentencing in the case, the United States will fully advise the Court
and the Probation Office of the fact, manner, and extent of the defendant's
cooperation and his commitment to prospective cooperation with the
United States' investigation and prosecutions, all material facts
relating to the defendant's involvement in the charged offense, and
all other relevant conduct. To enable the Court to have the benefit
of all relevant sentencing information, the United States may request,
and the defendant will not oppose, that sentencing be postponed until
his cooperation is complete. The United States and the defendant understand
that the Court retains complete discretion to accept or reject the
sentences argued for by either party, as provided for under Paragraph
9 of this Plea Agreement. The defendant understands that, as provided
in Fed. R. Crim. P. 11(c)(3)(B), if the Court does not impose a sentence
consistent with either party's recommendation contained in this Agreement,
he nevertheless has no right to withdraw his plea of guilty.
DEFENDANT'S COOPERATION
- The defendant will cooperate fully and truthfully with the United
States in the prosecution of this case, the conduct of the current
federal investigation of violations of federal criminal laws involving
the provision of services and products under the E-Rate Program, any
other federal investigation resulting therefrom, and any litigation
or other proceedings arising or resulting from any such investigation
to which the United States is a party ("Federal Proceeding"). The
ongoing, full, and truthful cooperation of the defendant shall include,
but not be limited to:
- producing all non-privileged documents, including claimed personal
documents, and other materials, wherever located, in the possession,
custody, or control of the defendant, requested by attorneys and
agents of the United States;
- making himself available for interviews, upon the request of
attorneys and agents of the United States;
- responding fully and truthfully to all inquiries of the United
States in connection with any Federal Proceeding, without falsely
implicating any person or intentionally withholding any information,
subject to the penalties of making false statements (18 U.S.C.
§ 1001) and obstruction of justice (18 U.S.C. § 1503);
- otherwise voluntarily providing the United States with any non-privileged
material or information, not requested in (a) - (c) of this paragraph,
that he may have that is related to any Federal Proceeding; and
- when called upon to do so by the United States in connection
with any Federal Proceeding, testifying in grand jury, trial,
and other judicial proceedings, fully, truthfully, and under oath,
subject to the penalties of perjury (18 U.S.C. § 1621), making
false statements or declarations in grand jury or court proceedings
(18 U.S.C. § 1623), contempt (18 U.S.C. §§ 401
- 402), and obstruction of justice (18 U.S.C. § 1503).
- Each party reserves the right to argue for an amount of restitution
and a fine they believe is appropriate to the crime, the harm to the
victims, and the defendant's financial ability to pay. To assist the
United States in making this determination, the defendant agrees that
he will deliver to the United States prior to sentencing a completed
financial statement identifying all the defendant's assets, and that
he will promptly provide full and accurate additional information
to the United States and this Court about his assets, debts, and income,
in such form and at such times as the United States may request. If
the defendant fails to comply with this provision the United States
is relieved of its obligation to recommend a sentencing reduction
for Acceptance of Responsibility pursuant to U.S.S.G. § 3E1.1
or any other sentencing recommendation contained in this agreement,
including a downward departure pursuant to U.S.S.G. § 5K1.1.
GOVERNMENT'S AGREEMENT
- Subject to the full, truthful, and continuing cooperation of the
defendant, as described in Paragraphs 12 and 13 of this Plea Agreement,
and upon the Court's acceptance of the guilty plea called for by this
Plea Agreement and the imposition of the sentence, the United States
will not bring further criminal charges against the defendant for
any act or offense committed before the date of this Plea Agreement
that was undertaken in furtherance of, or in any way related to, any
conspiracies to defraud the United States in connection with applications
for funding or the receipt of payment for services rendered or goods
provided under the E-Rate Program ("the Relevant Offenses"). The nonprosecution
terms of this paragraph do not apply to civil matters of any kind,
to any violation of the federal tax or securities laws, or to any
crime of violence.
REPRESENTATION BY COUNSEL
- The defendant has reviewed all legal and factual aspects of this
case with his attorney and is fully satisfied with his attorney's
legal representation. The defendant has thoroughly reviewed this Plea
Agreement with his attorney and has received satisfactory explanations
from his attorney concerning each paragraph of this Plea Agreement
and alternatives available to the defendant other than entering into
this Plea Agreement. After conferring with his attorney and considering
all available alternatives, the defendant has made a knowing and voluntary
decision to enter into this Plea Agreement.
VOLUNTARY PLEA
- The defendant's decision to enter into this Plea Agreement and
to tender a plea of guilty is freely and voluntarily made and is not
the result of force, threats, assurances, promises, or representations
other than the representations contained in this Plea Agreement. The
United States has made no promises or representations to the defendant
as to whether the Court will accept or reject the recommendations
contained within this Plea Agreement.
VIOLATION OF PLEA AGREEMENT
- The defendant agrees that, should the United States determine in
good faith, during the period that any Federal Proceeding is pending,
that the defendant has failed to provide full and truthful cooperation,
as described in Paragraphs 12, 13, and 14 of this Plea Agreement,
or has otherwise violated any provision of this Plea Agreement, the
United States will notify the defendant or his counsel in writing
by personal or overnight delivery or facsimile transmission and may
also notify his counsel by telephone of its intention to void any
of its obligations under this Plea Agreement (except its obligations
under this paragraph), and the defendant shall be subject to prosecution
for any federal crime of which the United States has knowledge including,
but not limited to, the substantive offenses relating to the investigation
resulting in this Plea Agreement. The defendant agrees that, in the
event that the United States is released from its obligations under
this Plea Agreement and brings criminal charges against the defendant
for any Relevant Offense, the statute of limitations period for such
offense will be tolled for the period between the date of the signing
of this Plea Agreement and six (6) months after the date the United
States gave notice of its intent to void its obligations under this
Plea Agreement.
- The defendant understands and agrees that in any further prosecution
of him resulting from the release of the United States from its obligations
under this Plea Agreement based on the defendant's violation of the
Plea Agreement, any documents, statements, information, testimony,
or evidence provided by him to attorneys or agents of the United States,
federal grand juries, or courts, and any leads derived therefrom,
may be used against him in any such further prosecution. In addition,
the defendant unconditionally waives his right to challenge the use
of such evidence in any such further prosecution, notwithstanding
the protections of Fed. R. Evid. 410.
ENTIRETY OF AGREEMENT
- This Plea Agreement constitutes the entire agreement between the
United States and the defendant concerning the disposition of the
criminal charges in this case. This Plea Agreement cannot be modified
except in writing, signed by the United States and the defendant.
- The undersigned attorneys for the United States have been authorized
by the Attorney General of the United States to enter this Plea Agreement
on behalf of the United States.
- A facsimile signature shall be deemed an original signature for
the purpose of executing this Plea Agreement. Multiple signature pages
are authorized for the purpose of executing this Plea Agreement.
DATED: July 10, 2008 |
Respectfully submitted, |
BY: |
_______________/s/________________
JAY H. SOLED, Defendant
_______________/s/________________
MICHAEL MONICO
Counsel for Jay H. Soled |
BY:
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_______________/s/________________
Barry J. Kaplan
Kalina M. Tulley
Michael W. Boomgarden
Rosemary S. Thompson
Attorneys
U.S. Department of Justice
Antitrust Division
209 S. LaSalle St., Ste. 600
Chicago, IL 60604
Tel.: 312-353-7530 |
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