Opinion
06 Cr. 917-01(RWS).
May 8, 2007
SENTENCING OPINION
On October 19, 2006, defendant Charles Craig Gile ("Gile) pled guilty to one count of conspiracy to falsify bank records and commit wire fraud in violation of 18 U.S.C. § 371, a Class D felony. For the reasons set forth below, Gile will be sentenced to a term of imprisonment of twelve months and one day, to be followed by a two-year term of supervised release. Gile will also be required to pay restitution of $185,819, a fine of $3,000, and a mandatory assessment of $100.
Prior Proceedings
Gile surrendered on September 28, 2006, and was released that same day on his own recognizance. An information was filed in the Southern District of New York on September 28, 2006, charging that from 2003 up to and including January 2004, in the Southern District of New York and elsewhere, Gile and others conspired, in violation of 18 U.S.C. § 371, to make false bank entries, in violation of 18 U.S.C. § 1005, and wire fraud, in violation of 18 U.S.C. § 1343.
On October 19, 2006, Gile appeared before the Honorable James C. Francis of this district and pled guilty to the charged criminal conduct in accordance with a plea agreement entered into with the Government. Gile's guilty plea was accepted by the court that same day. He is scheduled to be sentenced on May 11, 2007.
The Sentencing Framework
In accordance with the Supreme Court's decision in United States v. Booker, 125 S. Ct. 738 (2005) and the Second Circuit's decision in United States v. Crosby, 397 F.3d 103 (2d Cir. 2005), the sentence to be imposed was reached through consideration of all of the factors identified in 18 U.S.C. § 3553(a), including the advisory Sentencing Guidelines (the "Guidelines") established by the United States Sentencing Commission. Thus, the sentence to be imposed here is the result of a consideration of:
(1) the nature and circumstances of the offense and the history and characteristics of the defendant;
(2) the need for the sentence imposed —
(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;
(3) the kinds of sentences available;
(4) the kinds of sentence and the sentencing range established for —
(A) the applicable category of offense committed by the applicable category of defendant as set forth in the guidelines . . .;
(5) any pertinent policy statement . . . [issued by the Sentencing Commission];
(6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and
(7) the need to provide restitution to any victims of the offense.18 U.S.C. § 3553(a). A sentencing judge is permitted to find all the facts appropriate for determining a sentence, whether that sentence is a so-called Guidelines sentence or not. See Crosby, 397 F.3d at 111.
The Defendant
The following description draws on the Pre-Sentence Investigation Report prepared by the Probation Office of the United States District Court for the Southern District of New York on January 18, 2007, and revised on April 6, 2007 (the "PSI").
Charles Craig Gile was born in Maine in 1964. He was married in 1991 and has three children, ages twelve, ten, and seven. Two of his three children have been diagnosed with ADHD, for which they take medication and are under the care of a psychiatrist and psychologist.
Gile and his family currently reside in an affluent, gated community in Florida, which they moved to several months ago. Prior to living at this address, they resided in another home in Florida which is currently for sale. From 1996 to 2005, Gile and his wife lived in Connecticut, prior to which they had lived in Manhattan and Pennsylvania. While residing in Connecticut, Gile started a youth basketball and baseball clinic. Although he no longer runs the clinic, he continues to coach both sports in his community and also volunteers in other community-based associations.
Gile received an M.B.A. from The Wharton School at the University of Pennsylvania in 1994. He entered the U.S. Navy in 1986 and received an honorable discharge in 1994. His rank at separation was Lieutenant. He received a Navy Commendation Medal with a combat distinguishing "V" for valor, two Air Medals, a Navy Achievement Medal, a National Defense Service Medal, and a SW Asia Service Medal with Bronze Star, among others. Prior to joining the Navy, Gile earned a B.S. degree from Vanderbilt University in Nashville, Tennessee in 1986.
Gile is the owner of his family's interior decorating business, for which he is also the main salesperson according to his wife. In addition to Gile and his wife, the company consists of two sales people (independent contractors), two part-time office managers, and two decorators. The business has between 40 and 50 clients per month.
From 2004 to 2005, Gile was reportedly employed as a portfolio manager for Graham Capital, a hedge fund manager with offices in Connecticut. Between 1994 and 2004, Gile was employed by Citibank in Manhattan. Gile started as a summer intern at Citibank and was later promoted to U.S. Bond Trader and then Commodity Derivative Trader. He was terminated from his position at Citibank in March 2004 due to his involvement in the instant offense.
As of December 2006, Gile reported over $4,500,000 in assets and a net worth of over $2,500,000, but a negative monthly cash flow of over $19,700. An Equifax credit report generated on December 15, 2006, indicates that Gile has over $2,100,000 of total debt.
The Offense Conduct
The following description draws on the PSI. The specific facts of the underlying conduct are adopted as set forth in that report.
Working at Citibank's Manhattan offices, Gile was employed by Citibank as the head of American sales and trading at the Commodities Desk. David Becker ("Becker") was Gile's supervisor and co-defendant.
It was discovered that from 2003 through January 2004, Gile and Becker had engaged in a scheme to falsify the reported financial performance of the Commodities Desk by inflating the trading profits and under-reporting the market risk of the Commodities Desk. This was done to enhance the co-defendants apparent job performance and their eligibility for bonuses from Citibank.
In support of the scheme, Gile: (1) made changes to the Correlations for certain options held by the Commodities Desk that artificially inflated the present value of those option by approximately $2.25 million; (2) moved fictitious trades that had previously been moved by Becker into the live portfolio back into the test portfolio; (3) gave false market quotes to a broker at an independent commodities brokerage firm that would in turn supply the false quotes to Citibank's Financial Control Department in order to undermine its monitoring of the Commodities Desk; and (4) reset the Correlations to their earlier levels after they had been altered by Becker.
Generally, the victim of this scheme, Citibank, suffered a loss when it issued year-end bonuses to the co-defendants based upon the falsified profit figures report by the Commodities Desk. An employee's bonus normally factors in the profits or losses generated by the employee and/or the respective department. Because it is difficult to assess what Gile's bonus may have been if there had been no manipulation, Gile and the Government agreed on a restitution amount of $185,819.
The Relevant Statutory Provisions
The maximum term of imprisonment is a term of five years, pursuant to 18 U.S.C. § 371. In addition, pursuant to 18 U.S.C. § 3583(b)(2), a term of not more than three years' supervised release may be imposed if a sentence of imprisonment is imposed.
Gile is eligible for not less than one nor more than five years' probation, pursuant to 18 U.S.C. § 3561(c)(1). Because the offense is a felony, pursuant to 18 U.S.C. § 3563(a)(2), one of the following must be imposed as a condition of probation unless extraordinary circumstances exist: a fine, restitution, or community service.
Pursuant to the Violent Crime Control and Law Enforcement Act of 1994, all offenders on probation, parole or supervised release for offenses committed after September 13, 1994, are required to submit to one drug test within fifteen days of commencement of probation, parole or supervised release and at least two drug tests thereafter for use of a controlled substance, unless ameliorated or suspended by the court due to its determination that the defendant poses a low risk of future substance abuse as provided in 18 U.S.C. §§ 3563(a)(5) and 3583(d).
The maximum fine is $371,638, or twice the pecuniary loss of $185,819, pursuant to 18 U.S.C. § 3571. A special assessment in the amount of $100 is mandatory, pursuant to 18 U.S.C. § 3013.
Full restitution to the victim, Citibank, is required under 18 U.S.C. §§ 3663A- 3664 in the amount of $185,819.
The Guidelines
The November 1, 2006, edition of the United States Sentencing Commission Guidelines Manual has been used in this case for calculation purposes, pursuant to U.S.S.G. § 1B1.11(a).
The Guideline for violations of 18 U.S.C. § 371 is found in U.S.S.G. § 2X1.1, which directs the base offense level to be derived from the Guideline for the substantive offense. The Guideline for the substantive offenses herein is found in U.S.S.G. § 2B1.1. Pursuant to U.S.S.G. § 2B1.1(a)(2), the offense conduct results in a base offense level of 6. Because the value of the payments received by Gile is more than $120,000 but less than $200,000, the base offense level is increased by ten points, pursuant to U.S.S.G. § 2B1.1(b)(1)(F), for a total base offense level of 16.
Based on his plea allocution, Gile has shown recognition of responsibility for the offense. Pursuant to U.S.S.G. § 3E1.1(a), the offense is therefore reduced two levels. Further, because Gile's timely notification of his intention to plead guilty has allowed the Government to allocate its resources more efficiently, and because the offense level is 16 or greater, the offense level is reduced one additional level, pursuant to U.S.S.G. § 3E1.1(b).
The defendant's resulting adjusted offense level is 13.
Gile has no known prior criminal convictions. Thus, Gile has no criminal history points and a Criminal History Category of I.
Based on a total offense level of 13 and a Criminal History Category of I, the Guidelines range for imprisonment is 12 to 18 months.
The Guidelines range for a term of supervised release is at least two but not more than three years, pursuant to U.S.S.G. § 5D1.2(a)(2). If a sentence of imprisonment of one year or less is imposed, a term of supervised release is not required but is optional, pursuant to U.S.S.G. § 5D1.1(b). Supervised release is required if the court imposes a term of imprisonment of more than one year or when required by statute, pursuant to U.S.S.G. § 5D1.1(a).
Pursuant to U.S.S.G. §§ 5B1.1, application note 2, Gile is not eligible for probation because the applicable Guidelines range is in Zone D of the Sentencing Table.
The Guidelines fine range for the instant offense is from $3,000 to $371,638, pursuant to U.S.S.G. § 5E1.2(c)(3)(A) and (c)(4)(A). Subject to the defendant's ability to pay, in imposing a fine pursuant to U.S.S.G. § 5E1.2(d)(7), the Court shall consider the expected costs to the Government of any imprisonment, probation, or supervised release. The most recent advisory from the Administrative Office of the United States Courts suggests a monthly cost of $1,952.66 to be used for imprisonment, a monthly cost of $287.50 for supervision, and a monthly cost of $1,736.98 for community confinement.
Pursuant to U.S.S.G. § 5E1.1(a)(1), in the case of an identifiable victim, the Court is required to enter a restitution order for the full amount of the victim's loss si such order is authorized under 18 U.S.C. § 3663A.
The Remaining Factors of 18 U.S.C. § 3553(a)
Having engaged in the Guideline analysis, this Court also gives due consideration to the remaining factors identified in 18 U.S.C. § 3553(a) in order to impose a sentence "sufficient, but not greater than necessary," as is required in accordance with the Supreme Court's decision in Booker, 543 U.S. 220, and the Second Circuit's decision in Crosby, 397 F.3d 103. In particular, § 3553(a)(1) asks that the sentence imposed consider both "the nature and circumstances of the offense and the history and characteristics of the defendant," while § 3553(a)(2)(A) demands that the penalty "provide just punishment for the offense" that simultaneously "afford[s] adequate deterrence to criminal conduct" as required by § 3553(a)(2)(B). Furthermore, pursuant to § 3553(a)(6), the Court is also mindful of "the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct."
Having considered all the factors set forth in § 3553(a), it is determined that a Guidelines sentence is warranted in the instant case.
The Sentence
For the instant offense, Gile is hereby sentenced to a term of imprisonment of twelve months and one day, to be followed by a two-year term of supervised release. In addition, Gile is to pay a fine of $3,000, restitution in the amount of $185,819 to be paid to the Clerk of the Court for disbursement to Citibank, and a mandatory special assessment of $100 to be paid to the United States immediately.
As Gile has kept all court appearances, has been in compliance with all terms and conditions of his pretrial release, and is not viewed as a flight risk or a danger to the community, he is deemed a good candidate for voluntary surrender, pursuant to 18 U.S.C. § 1343(a)(2)(B). Gile is therefore directed to report to the Bureau of Prisons no later than June 11, 2007, to commence a term of imprisonment of twelve months and one day.
Gile is further directed to report to the nearest United States Probation Office within seventy-two hours of release from custody to commence a two-year term of supervised release. It is recommended that Gile be supervised by the district of his residence.
As mandatory conditions of his supervised release, Gile shall:
(1) not commit another federal, state or local crime;
(2) not illegally possess a controlled substance;
(3) not possess a firearm or destructive device; and
(4) cooperate in the collection of DNA as directed by the probation officer.
The mandatory drug testing condition is suspended due to the Court's determination that Gile poses a low risk of future substance abuse.
The standard conditions of supervision (1-13) shall be imposed, along with the following special conditions:
(1) Gile shall provide the probation officer with access to any requested financial information.
(2) Gile shall not incur new credit charges or open additional lines of credit without the approval of the probation officer unless Gile is in compliance with the installment payment schedule.
The terms of this sentence are subject to modification at the sentencing hearing set for May 11, 2007.
It is so ordered.