Opinion
01 Cr. 0064 (RWS)
January 31, 2002
SENTENCING OPINION
Defendant Osita N. Iroku ("Iroku") pleaded guilty on April 4, 2001 to mail fraud in violation of 18 U.S.C. § 1341. For the reasons set forth below, Iroku will be sentenced to 12 months and 1 day in federal custody, to be followed by three years supervised release. Further, Iroku is ordered to pay restitution in the amount of $148,000. A special assessment fee of $100 is mandatory.
The Defendant
Iroku was born on June 15, 1970 in Brooklyn, New York. He is the second of four children born to Humphrey Aggrey Iroku and Rachel nee Onyebeke. Iroku's siblings are: Tochi Malize, age 33, a physician; Obioma Iroku, age 28, a real estate manager; and Ugonna Iroku, age 27, a medical school student. Iroku's father, age 62, is a physician/general surgeon, and his mother, age 59, is the director of health education at St. Luke's/Roosevelt Hospital.
Although raised in the New York City metropolitan region, Iroku and his family moved to Nigeria in 1983 for approximately five years while his father was part of a project to build new hospitals there. From 1984 to 1988, Iroku attended Federal Government College, a Nigerian high school. From 1988 to 1989, he attended the University of Nigeria, taking courses in law. Upon his return to the United States, from September 1989 to February 1990, Iroku attended Kingsborough Community College in Brooklyn, New York. He then attended Long Island University-CW Post, Brentwood, New York, until 1991, at which time he transferred to SUNY-Stony Brook, Stonybrook, New York, where he graduated in 1993. From 1993 to 1996, Iroku attended New York University School of Law, attaining a June Doctor degree in September 1998.
From December 1998 to March 2000, Iroku was employed as an asset manager at Franklin Street Capital in New York, New York, earning approximately commissions only. It was during Iroku's employment at Franklin Street Capital that he became involved in the instant offense. Iroku is currently employed as an assistant to the executive chairman of African Affairs at the United Nations Association of the United States in Washington, D.C., earning approximately $20,000 annually.
The Offense
Iroku was charged with mail fraud in violation of 18 U.S.C. § 1341 following an investigation by the Federal Bureau of Investigation ("FBI") based on information provided by the victim, Themistoklis Theofilaktidis ("Theofilaktidis")
In or about the fall of 1998, Theofilaktidis met with Iroku and his associate in Plainville, New York to discuss investments. During the conversation, Iroku held himself out as the manager and principal of Franklin Street Capitalists, Inc. ("FSC"), a purported joint venture formed for the purpose of pooling funds to engage in various investment activities. Iroku guaranteed Theofilaktidis a 242% return on his investment if he invested in FSC. Theofilaktidis considered the investment, and Iroku mailed a document captioned "Letter of Understanding on Your Investment" ("Letter") to Theofilaktidis, which represented: (1) that FSC was formed in September 1998 to manage assets of several of Iroku's associates, who had contributed capital investments to increase the leveraging power of FSC and to share in FSC's earnings; (2) since October 1998, the principals of FSC had "witnessed earnings far in excess of normal market returns"; (3) that the purpose of the joint venture was to pool "resources to effectively engage in various business investments that [individual investors] would otherwise be unable to take advantage of, including but not limited to, investments in real estate and NYSE and NASDAQ quoted stocks"; and (4) that FSC would pay each investor dividends equivalent to 20% of the principal investment, one month from the date of investment; 10% of the principal investment, two months from the date of investment; and 5% of the principal, for ten months thereafter.
Theofilaktidis orally agreed to the terms of the Letter and, on several occasions from December 1998 to July 1999, provided funds totaling approximately $148,000 to Iroku. At Iroku's direction, Theofilaktidis deposited the funds into a bank account in Iroku's name. In acknowledgment, Iroku provided Theofilaktidis with several "Certificates of Investment," each of which purported to confirm that Theofilaktidis would receive "Minimum Guaranteed Dividends" as set forth in the Letter. Iroku also periodically provided Theofilaktidis with statements on FSC letterhead purporting to show gains in his investment.
In September, 1999, Theofilaktidis met with Iroku and advised him that he was considering cashing out his investments. Iroku gave assurances that the investments in FSC were doing well. In October 1999, Iroku phoned Theofilaktidis solicited an investment in a real estate deal to acquire buildings worth approximately $20 million in Manhattan. To encourage the investment, Iroku faxed information to Theofilaktidis that posted the cash balance of FSC's deposits and indicated that Theofilaktidis's investment in FSC was worth $379,976. Iroku also encouraged Theofilaktidis by providing a copy of a purported life insurance policy in Iroku's name, with Theofilaktidis named as beneficiary. On December 20, 1999, Theofilaktidis finally agreed to enter into a joint venture with Iroku for the purchase and sale of real estate, under which Theofilaktidis would roll over his FSC investment (which Iroku valued at $506,627.10) in exchange for a 7% equity share in the venture. From that point forward, Iroku provided Theofilaktidis with periodic correspondence purporting to show that FSC was engaged in venture capital opportunities.
After FBI agents reviewed documents received by Theofilaktidis and compared them with actual bank account statements, it was found that the account statements that had been faxed by Iroku to Theofilaktidis were fraudulent. For instance, while a November 24, 1999 statement provided by Iroku for a FSC account indicated an ending cash balance reflected an ending cash balance of $2,187,929 for the period October 15 through November 12, 1999, actual bank statements reflected a balance of only $2,010 for that period. Similarly, a brokerage account statement sent by Iroku reflecting a balance of $906,856 for the period July 1 through September 30, 1999, was later found to have a balance of only $129.44 for the same period. The life insurance policy had actually been opened by Iroku with Theofilaktidis as beneficiary, but only one payment had been made and the policy lapsed. As for the personal bank account of Iroku, in which Theofilaktidis was directed to deposit his $148,000 for investment in FSC, it was found that numerous cash withdrawals had been made from automatic teller machines, indicating a portion had been converted by Iroku for his personal use.
Iroku voluntarily surrendered to authorities on November 13, 2000.
The Guidelines
The Presentence Report prepared by the U.S. Probation Office assigns Iroku's offence conduct under the United States Sentencing Guidelines (the "Guidelines") at a base offense level of 6 for violation of 18 U.S.C. § 1341. See U.S.S.G. § 2F1.1. Because the approximate amount of loss in connection with the offense is $148,000, the base offense level is increased by 7 pursuant to § 2F1.1(b)(1) of the Guidelines, as the loss is more than $120,000 but not more than $200,000. Another two levels are added because the offense involved more than minimal planning. See U.S.S.G. § 2F1.1(b)(2)(A). Pursuant to Guidelines § 3E1.1(a), two levels are subtracted for Iroku's acceptance of responsibility, yielding an adjusted offense level of 13.
The Guidelines Manual in effect at the time the offense was committed was utilized for calculation purposes in accordance with § 1B1.11 (b)(1).
Iroku has no prior convictions, giving him no criminal history points and a Criminal History Category of I. The Guidelines range for an offender with a total offense level of 13 and a criminal history category of I is 12 to 18 months.
The Sentence
Iroku will be sentenced to 12 months and 1 day imprisonment. Pursuant to Guidelines § 5D1.2 (a), this term in custody will be followed by three years of supervised release.
Iroku is to report to the nearest Probation Office within 72 hours of his release from custody, and supervision shall be in the district of residence. As mandatory conditions of supervised release, Iroku shall (1) not commit another federal, state, or local crime; (2) not illegally possess a controlled substance; and (3) not possess a firearm or destructive devise.
The standard conditions of supervision (1-13) will apply, along with the following special conditions: (1) Iroku shall provide the probation officer with access to any requested financial information; (2) Iroku shall not incur new credit charges or open additional lines of credit without the approval of the probation officer unless Iroku is in compliance with the restitution installment payment schedule; and (3) Iroku shall perform 200 hours of community service as directed by the probation officer.
No fine will be imposed given Iroku's inability to pay. However, a special assessment fee of $100 is mandatory and is due immediately.
Further, Iroku shall make restitution payable to the Clerk, U.S. District Court, for disbursement to Themistoklis Theofilaktidis in the amount of $148,000. If Iroku is engaged in a Bureau of Prisons ("BOP") non-UNICOR work program, he shall pay $25 per quarter toward the criminal financial penalties. However if Iroku participates in the BOP's UNICOR program as a grade 1 through 4, he shall pay 50% of his monthly UNICOR earnings toward the criminal financial penalties, consistent with BOP regulations at 28 C.F.R. § 545.11. The balance of restitution shall be payed in monthly installments of 10% of gross monthly income over a period of supervision to commence 30 days after the release from custody. Iroku shall notify the United States Attorney for this district within 30 days of any change of mailing or residence address that occurs while any portion of the restitution remains unpaid.
This sentence is subject to modification at the sentencing hearing now set for February 5, 2002.
It is so ordered.