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United States v. Mendelson

May 10, 2010


The opinion of the court was delivered by: Surrick, J.


Presently before the Court is the Motion of United States of America to Modify or Adjust Payment for Fine (Doc. No. 84). For the following reasons, the United States' Motion will be granted.


On December 12, 2007, Respondent entered a plea of guilty to conspiring to make false statements to a bank in violation of 18 U.S.C. § 371 and bank bribery in violation of 18 U.S.C. § 215. (Doc. No. 14 at 1.) On March 25, 2008, Judge Giles sentenced Respondent to imprisonment for a period of 60 days and ordered him to pay a fine of $1 million. (Doc. No. 33 at 3.) The fine was due immediately and provided a payment schedule "of not less than $100,000.00... per month while Defendant is incarcerated.... Any portion of the fine not paid in full at the time of Defendant's release from imprisonment shall become a condition of supervision and shall be paid at a rate of not less than $250,000... per month." (Id.)

Following his sentencing, Respondent's health, which was already poor, worsened significantly. (Doc. No. 85 at 3.) Because of his health problems, the date on which Respondent was to surrender to the Bureau of Prisons has been extended multiple times. (See Doc. Nos. 54, 59, 61, 63, 64, 66, 67, 76, 87, and 90.) As of this date, Respondent has still not served his prison sentence. (Doc. No. 84 at 2.)

Respondent is currently the sole caretaker of several financially dependant individuals. (Doc. No. 91 at 17-19; see also Doc. No. 91 Ex. G-4.) Respondent cares for his five-year-old daughter and her 32-year-old mother, who has significant problems that have required institutionalization and ongoing treatment. (Doc. No. 91 at 17-18.) Respondent's 29-year-old son lives with him, is disabled as a result of an automobile accident, and is also financially dependant on Respondent. (Id. at 18.) Finally, Respondent's unemployed 26-year-old daughter and 22-year-old nephew live with Respondent. (Doc. No. 91 at 18-19; see also Doc. No. 91 Ex. G-4.)

Respondent has significant investments. (Doc. No. 91 Ex. G-4; see also Doc. No. 91 at 22.) Prior to his sentencing, Respondent submitted a net worth statement indicating that he was worth over $20 million. (Doc. No. 91 at 20.) Much of Respondent's wealth is in the form of real estate investments. (Id. at 22.) Since his initial net worth statement was submitted, the value of Respondent's real estate holdings has significantly decreased. (Id.; see also Doc. No. 91 Ex. G-4.) In addition to the decrease in real estate values, Respondent lost two properties to bankruptcy and tax sales. (Doc. No. 91 at 22.) Nevertheless, Respondent does have an interest in a valuable property on Columbus Avenue in Philadelphia that he is currently attempting to sell. He estimates his interest in that property to be approximately $6 million. Respondent is also a co-trustee of the Mendelson Family Trust. The trust assets have a value in excess of $800,000. Respondent presently uses the trust to pay his household expenses. (Id. at 23-26.) Respondent asserts that his gross monthly income is $14,200 and his total monthly expenses are $27,785. (Doc. No. 91 Ex. G-4.)

On September 4, 2009, Respondent sold his home for $3.9 million. (Id. Ex. G-3.) This prompted the Government to file the instant motion to adjust payment of Respondent's fine. Based on the HUD Settlement Statement, after the payment of settlement expenses, Respondent received $1,256,486.92 from the sale. (Id. Ex. G-1; see also Doc. No. 84 Ex. A.) On September 14, 2009, Counsel for the Government contacted Respondent and requested payment of the fine. (Doc. No. 84 at 3.) On September 15, 2009, after discussion between counsel, Respondent paid $200,000 towards the fine. (Id.; see also Doc. No. 85 at 4.) In addition, $156,763.68 was paid towards the fine on December 10, 2009, when the Government received funds that were being held by the title clerk after the sale of Respondent's residence.*fn1 As a result of those payments, and an initial "good faith" payment of $5,000 on July 8, 2009 (see Doc. No. 91 Ex. D-3), Respondent has paid a total of $361,763.68 toward the $1 million fine imposed on March 25, 2008. Respondent has also paid $200 in special assessments.


In its Motion to Modify or Adjust Payment Schedule for Fine, the Government asks the Court to adjust the payment schedule of Respondent's fine or to make the balance of the fine payable immediately pursuant to 18 U.S.C. § 3572(d)(3).*fn2 (Doc. No. 84 at 3, 6.) The Government argues that Respondent's recent sale of his home was a material change in economic circumstances that affected Respondent's ability to pay the fine. (Id. at 4.) Respondent replies that the Government's motion is actually asking for both an adjustment of the fine under § 3572(d)(3) and a modification of the fine under § 3573. (Doc. No. 85 at 2.) Respondent argues that the fine should be remitted because the fine does not reflect Judge Giles's intent in imposing the fine. (Doc. No. 85 at 7.) With regard to an adjustment under § 3572(d)(3), Respondent argues that the fine was due immediately and therefore § 3572(d)(3) does not apply. (Doc. No. 85 at 6.) In addition, Respondent argues that the Government did not properly assert its claim at the closing for the sale of Respondent's home. (See Doc. No. 85 at 4.)

A. Government's Request to Modify or Adjust Respondent's Payment Schedule

The Government requests an adjustment of the payment schedule for Respondent's fine pursuant to § 3572(d)(3). (Doc. No. 84 at 6.) Respondent replies by interpreting the Government's motion as a motion to modify the fine under § 3573, stating that "the government has expressly moved in the alternative for 'modification' of the fine [under 18 U.S.C. § 3573], a petition which only the government has the authority to file." (Doc. No. 85 at 7-8.) Respondent contends that if the motion is interpreted as a § 3573 motion to modify, then this permits Respondent to seek a remission of the fine. (Id. at 2.) Respondent argues that we "should grant the government's alternative motion to 'modify' the fine but not in the manner proposed by the government." (Id. at 5.) Rather, we should use the Government's request to modify Respondent's fine as an opportunity to remit a significant portion of the fine.*fn3

Respondent's argument is without merit. The Government's motion does not request a modification of Respondent's fine under § 3573. The only mention of § 3573 in the Government's motion is a footnote, which correctly states that "only the government may petition for remission of a fine, and only upon the basis of administrative efficacy." (Doc. No. 84 at 4 n.2 (citing 18 U.S.C. § 3573; United States v. Seale, 20 F.3d 1279, 1286 n.8 (3d Cir. 1994)).) The Government advises that it never intended that the motion be treated as a motion to modify under ยง 3573. We are satisfied that the only fair reading of the Government's motion is that it requests only an adjustment of the ...

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