USA Letter John Campos Case

8/2/2019 USA Letter John Campos Case

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DOCKET

By HandHonorable Lewis A. KaplanUnited States District CourtSouthern District ofNew York500 Pearl StreetNew York, New York 10007Re: United States v. John Campos, S7 10 Cr. 336 (LAK)

Dear Judge Kaplan:The Government respectfully submits this letter in support of its position that the Courtshould accept the guilty plea of defendant John Campos (the "defendant") to a bank gamblingmisdemeanor offense, in accordance with Rule 11 (c )(3) of the Federal Rules of CriminalProcedure. For the reasons described below, Campos 's plea is in the interests of the Governmentand the defendant and otherwise constitutes a fair and just resolution ofthe matter pendingagainst him.

BackgroundCampos appeared before the Court on March 30, 2012 and entered a plea of guilty toSuperseding Information S7 IOCr. 336 (the "Information") pursuant to a plea agreement (the"Plea Agreement") with the Government. As the Court found during the plea proceeding, thedefendant's plea was knowing and voluntary, and was supported by an independent basis in factconcerning each of the essential elements of the offense. United States v. Campos, Tr., Mar. 28,2012, at 18. 1 The Court engaged in a thorough allocution of the defendant, in accordance withall of the requirements of Rule 11 of the Federal Rules ofCriminal Procedure, and the defendantexpressly acknowledged that he had read and understood the Plea Agreement, which set forth,among other things, the maximum penalties at issue, the parties' view of the applicableGuidelines range, the fact that neither the U.S. Probation Office nor the Court would be boundby the parties' Guidelines calculations, and the fact that the sentence imposed upon the defendantwould be solely determined by the Court.The Court deferred acceptance of the plea and questioned the basis for allowing thedefendant to plead guilty to a single gambling count with a one year maximum sentence and theproposed dismissal of the felony counts originally charged. The Government explained that the

The transcript is attached to this letter for the Court's convenience.

DOCUMENTELECTRONICALLY FILEDDOC#: ____ __

U.S. Department of JusticeUnited States Attorney

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JUDGE KAPLAN'S CHAMBERS

e SilviO J. Mollo BUildingne Saint Andrew's Pla::aew York, New York 10007

Case 1:10-cr-00336-LAK Document 174 Filed 04/18/12 Page 1 of 5


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Hon. Lewis A. Kaplan Page 2April 12,2012misdemeanor charge resulted in a Guidelines range that is similar to the range that would applyhad the defendant pled guilty to the felony charges contained in the Indictment. (Tr. 18-22). TheCourt then directed the Government to provide a letter setting forth "the rationale for acceptanceof the plea," noting that the Court would "leave the question of whether to accept the plea" untilthe date provisional1y set for sentencing, unless the Court came to a decision on the matterearlier. (Tr. 23). With this letter, the Government respectfully requests that the Court nowaccept the plea.Applicable Law

Federal Rule of Criminal Procedure I 1 c)(3)(A) provides that where a plea agreementprovides for the dismissal of other charges (as is the case here), "the court may accept theagreement, reject it, or defer a decision until the court has reviewed the presentence report." Therules further provide that, should the Court reject a plea agreement of this kind, the defendantmust be provided with an opportunity to withdraw his plea, although the defendant may elect tomaintain his plea of guilty even without the benefits afforded by the rejected plea agreement.Fed. R. Crim. P. 11(c)(5).While we have found no Second Circuit cases directly on point, in United States v.Severino, 800 F.2d 42, 46 (2d Cir. 1986), the Second Circuit, in a pre-GuideJines case, stated thata district court may reject a plea if it "has reasonable grounds for believing that acceptance of theplea would be contrary to the sound administration of justice." See also United States v. Torres-Echavarria, 129 F.3d 692, 696 (2d Cir. 1997) (holding that Severino's analysis remained goodlaw under the Guidelines). Other Circuits have held that the Government's decision to move todismiss charges in exchange for a plea to a lesser charge should be disturbed only where "theaction of the prosecuting attorney is such a departure from sound prosecutorial principle as to

mark it an abuse of discretion." United States v. Ammidown, 497 F.2d 615, 622 (D.C. Cir.1974); see also United States v. Barker, 681 F.2d 589, 591-92 (9th Cir. 1982) ("The decision tonegotiate a plea bargain and seek dismissal ofthe indictment is within the executive's undeniablediscretion to decide not to pursue a particular prosecution any further. . . . We assume the judgealso has a supervisory duty to determine, from the standpoint of the public interest, afterconsidering the nature of the charges and the facts involved, whether reducing the plea is sounreasonable that the prosecutor is not properly carrying out his function.") (internal citationsand quotation marks omitted); cf United States Securities & Exchange Commission v. CitigroupGlobal Markets, Inc., --- F.3d ----, 2012 WL 851807 (2d Cir. 2012) ("the scope of a court'sauthority to second-guess an agency's discretionary and policy-based decision to settle is at bestminimal. ").Discussion

In this case, the Government's determination not to further prosecute the original chargespending against Campos, in return for a plea to a single violation of 18 U.S.C. 1306, advancesthe Government's interests and the defendant's interests, constitutes a fair and just resolution ofthe matter, and accords with the sound administration of justice. That is true for a number ofreasons enumerated below in greater detail.



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Hon. Lewis A. Kaplan Page 3April 12,2012First, the misdemeanor to which Campos pled, 18 V.S.C. 1306, is targeted directly athis particular offense conduct: causing a bank insured by the Federal Deposit InsuranceCorporation to process illegal gambling transactions. The stated Congressional purpose for the

statute was "To prohibit certain banks and savings and loan associations from fostering orparticipating in gambling activities." Pub. Law 90-203 (Dec. 15, 1967). That is what thedefendant principally did in this case: he used his role as Vice Chairman of and consultant toSunFirst Bank ("SunFirst") to cause the bank to participate in illegal gambling activities.Second, the Guidelines range stipulated by the parties in the Plea Agreement iseffectively the same as the range would have been had the defendant pled guilty to all five felonygambling charges against him in the original indictment, S3 10 Cr. 336. Because the gamblingoffenses were "connected by a common criminal objective" andlor "constitut[ed] a commonscheme or plan," a plea to all five gambling counts would have been treated as a single group ofclosely related counts, pursuant to V.S.s.G. 3Dt.2(b). The base offense level for the felony

gambling counts would have been 12 pursuant to V.S.S.G. 2E3.l - precisely the same as it isfor the single misdemeanor gambling offense. Thus, with a two-level reduction for acceptanceof responsibility pursuant to V.S.S.G. 3El.1 (a), and an additional two-level reduction for aminor role pursuant to V.S.S.G. 3B 1.2(b), the adjusted offense level for either a felony ormisdemeanor gambling offense is the same: 8, which results in a Guidelines range of 0-6 monthsimprisonment for a defendant with no criminal history.2

Third, the Plea Agreement required the defendant to execute a consent order with theFederal Deposit Insurance Corporation that would bar him from "participating in any manner inthe affairs of any depository institution." In other words, the defendant would be barred from thebanking industry for life. Had the defendant pled guilty to, or been convicted of, the felonygambling charges in the Indictment, the defendant may also have been subject to such a lifetimeban,3 but obtaining such a ban would have required the Federal Deposit Insurance Corporation tobring a separate proceeding and potentially litigate the issue. Accordingly, securing a lifetimeban from banking in connection with the defendant's plea to the misdemeanor charge

2 Even a plea to the originally charged money laundering offense would not havesharply altered the Guidelines range. While the Court observed that Campos had been accusedof (and admitted to in connection with the plea) processing over $200 million in gamblingtransactions, the base offense level for laundering would not have been based on the dollar valueof the transactions but on the base offense level for gambling -level ]2 - because "the defendantcommitted the underlying offense." V.S.S.G. 2S1.1 (a)(2). The base offense level of 12 wouldbe increased by 2 levels because the conviction would have been under 18 V.S.C. 1956 (seeV.S.S.G. 2S1.1(b)(2 and possibly a further two levels for "sophisticated laundering" (seeV.S.S.G. 2Sl.l(3, resulting in a total offense level of 16. With a two-level minor-rolereduction and a two-level reduction for acceptance of responsibility, the final offense level wouldbe 12, which would have resulted in a Guidelines range of 10-16 months, the low-end of whichfalls well within the one-year statutory maximum in 18 V.S.C. 1306.

3 A felony conviction does not automatically trigger a lifetime ban from the bankingindustry, and whether such a ban is ultimately imposed depends on various factors under FDICregulations.



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Hon. Lewis A. Kaplan Page 4April 12,2012accomplishes the important objective of preventing the defendant from abusing his position atanother bank in the future.4 Thus, as compared to the consequences the defendant would faceafter a conviction on all five of the gambling charges in the Indictment, the Plea Agreement theGovernment has reached with Campos exposes him to the same Guidelines recommendation(albeit a lower statutory maximum), and includes an additional guaranteed ban from the bankingindustry.

Fourth, while the defendant's conduct was serious and certainly deserving of criminalprosecution, his role in the conspiracy charged in the Indictment was relatively minor ascompared to the other defendants charged. The other defendants charged are either (l) foundersand/or senior executives ofthe Poker Companies or (2) payment processors who served as agentsof the Poker Companies in seeking to identify ways to get United States banks to process thetransactions (usually by lying to banks but, sometimes, as was the case with Campos andSunFirst, offering to prop up failing financial institutions in return for poker processing). Unlikeeach of the other defendants - who continued to seek new processing channels over a multi-yearperiod notwithstanding numerous arrests and seizures Campos processed the transactions onlyfor his own bank for a period of less than one year. Unlike the other defendants, most of whommade millions from their illegal conduct, Campos received only $20,000 ($4,500 of which hekept) as a direct payment for poker processing, although such processing also served temporarilyto prop up SunFirst and Campos's investment in it (now worthless given the regulatory seizureof the bank). Finally, unlike all but one of the other defendants, Campos was never charged withany bank or wire fraud offense relating to the disguising of gambling transactions.

Fifth, the defendant's willingness to plead guilty to a misdemeanor gambling offense hadto be assessed against the litigation risk of proceeding to trial on six counts which, with oneexception, carried an identical Guidelines range. While the Government's case against thedefendant is strong - as we noted during the plea proceeding, there is evidence that SunFirst'slawyer explicitly told Campos that processing poker transactions was illegal, and there is no realdispute that Campos brought the poker business into SunFirst andlnar'sunFirst processed morethan $200 million in transactions for the Poker Companies - Campos's unique position in thecase provided him with a slightly more viable good f a i t ~ argument, one not available to otherdefendants, to the extent alleged good faith reliance evidence would be admissible at trial. Inorder to induce bankers like Campos to process their transactions, the Poker Companies and theiragents such as Elie plied Campos with mUltiple legal opinions regarding the alleged legality ofpoker processing. Unlike the other defendants - who engaged in, or were aware of, systematicgovernment action against the Poker Companies and who deliberately solicited legal opinionswhose conclusions were at odds with objectively identifiable reality Campos had a narrowerwindow into the legal issues confronting the online poker industry, and unlike the otherdefendants, was not aware of many of the arrests, court-ordered seizures and other events that

4 While this ban does not, as the Court observed, cover the securities industry, thedefendant has never before been involved in that industry and there is no indication that hewould likely be involved in the future. The defendant's career involved operating a steelbusiness before he invested money from that business in SunFirst and played a role in runningthe bank.



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Hon. Lewis A. Kaplan Page 5April 12, 2012cast substantial doubt on the validity of these opinions. As a result, there is an enhanced risk thatjurors could conceivably hesitate to convict Campos despite other evidence tending to negateCampos's alleged good faith.

For these reasons, the Government submits that the Plea Agreement entered into betweenthe Government and the defendant is fair and just and well within the bounds of appropriateprosecutorial discretion. Accordingly, we respectfully request that the Court now accept thedefendant's plea of guilty pursuant to the Plea Agreement.

Respectfully submitted,PREET BHARARA

By: Arlo Devlin-Brown/Andrew D. GoldsteinAssistant United States Attorneys(212) 637-250611559

Cc (by email): Fred Hafetz, Esq.Neil Kaplan, Esq.


USA Letter John Campos Case

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