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United States of America v. Donald Hellinger

September 18, 2012

UNITED STATES OF AMERICA
v.
DONALD HELLINGER, ET AL.



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

MEMORANDUM

Presently before the Court are the Government's and Defendants' Objections to the Sentencing Guidelines Calculations in Pre-Sentence Investigation Reports.

I. BACKGROUND

On February 10, 2011, a grand jury in the Eastern District of Pennsylvania issued a fourteen-count Indictment against Defendants Donald Hellinger, Ronald Hellinger, Michael Weisberg, Randy Trost, Jami Pearlman and Michele Quigley. (Indictment, ECF No. 1.)The Indictment charged the Defendants with: one count of conspiracy, in violation of 18 U.S.C. § 371; one count of operating an illegal money transmission business, in violation of 18 U.S.C. § 1960; one count of operating an illegal gambling business, in violation of 18 U.S.C. § 1955; eight counts of transmission of wagers and wagering information, in violation of 18 U.S.C. § 1084; and three counts of international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A).(Indictment.) The criminal conduct in this case was discovered in the course of a civil investigation conducted by the United States Department of Justice into Payment Processing Center, LLC ("PPC"). Defendants were all owners, directors, supervisors or managers of PPC. (See United States v. Payment Processing Ctr., LLC et al., Civ. No. 06-725, E.D. Pa.)

Between February 28 and March 2, 2012, five Defendants-Donald Hellinger, Ronald Hellinger, Weisberg, Trost and Quigley-entered pleas of guilty to Count 2 of the Indictment. (Min. Entries, ECF Nos. 99, 101, 106, 110, 113.)*fn1 Count 2 specifically charged Defendants with knowingly owning, conducting, managing or directing an unlicensed money transmitting business. The parties all agree that the money that was transmitted by Defendants was money derived from illegal gambling. The plea agreements reached between Defendants and the Government provide that the total amount of illegal gambling money that was transmitted through PPC was $44,000,000. (D. Hellinger Plea Agreement 4, ECF No. 102; see also Trost Plea Agreement 4, ECF No. 100; R. Hellinger Plea Agreement 4, ECF No. 108; Weisberg Plea Agreement 4, ECF No. 111; Quigley Plea Agreement 4, ECF No. 114 (collectively, "Plea Agreements").)

The United States Probation Office prepared Pre-Sentence Investigation Reports ("PSRs") as to each of the Defendants. These PSRs assess base offense levels of 30, based upon Section 2S1.1(a)(2) of the United States Sentencing Guidelines ("Guidelines").

Defendants object to the PSRs' assessment of their base offense level under U.S.S.G. § 2S1.1(a)(2), and argue that their base offense levels should be calculated to reflect the underlying criminal conduct, as provided by U.S.S.G. § 2S1.1(a)(1). (D. Hellinger Sent. Mem. 18; R. Hellinger Sent. Mem. 14-15; Quigley Sent. Mem. 2; Trost Sent. Mem. 2.)*fn2

The Government initially contended that the PSRs' assessment is correct, and that Defendants' Guidelines range should be calculated under subsection (a)(2). (See, e.g., Gov't's Sent. Mem. for D. Hellinger ("Gov't's Sent. Mem."*fn3 ) 8-9, ECF No. 144.)*fn4

The Government now argues that the correct Guideline is § 2S1.3.

On July 18, 2012, the Government filed sentencing memoranda.*fn5 (ECF Nos. 144-148.) Defendants filed their sentencing memoranda on July 20, 2012. (D. Hellinger Sent. Mem., ECF No. 149; Quigley Sent. Mem., ECF No. 150; R. Hellinger Sent. Mem., ECF No. 151; Trost Sent. Mem., ECF No. 161.) Weisberg filed a sentencing memorandum, by letter to the Court, on September 6, 2012. On September 10, 2012, the Government and Defendants submitted a Stipulation outlining the nature of PPC's gambling-related conduct. The Stipulation states:

The United States of America, by and through its undersigned counsel, Zane David Memeger, United States Attorney for the Eastern District of Pennsylvania, and Joel M. Sweet, Assistant United States Attorney for the same district, and defendants Donald Hellinger, Ronald Hellinger, Michael Weisberg, Randy Trost, and Michele Quigley, by and through their respective attorneys, for the purpose of establishing facts to assist the Court in deciding the applicable sentencing guidelines, AGREE and STIPULATE as follows:

1. Payment Processing Center, LLC ("PPC") processed payments on behalf of offshore Internet gambling companies.

2. In this regard, PPC engaged in the following activities:

a. receiving into PPC's bank accounts wire transfers from offshore gambling companies;

b. receiving by email from offshore gambling companies information concerning bettors' identities, addresses, and amounts of money due to bettors from the offshore gambling companies;

c. at the direction of offshore gambling companies, preparing checks drawn on PPC's bank accounts and payable to bettors;

d. at the direction of offshore gambling companies, preparing checks drawn on PPC's bank accounts and payable to vendors of the offshore gambling companies;

e. at the direction of offshore gambling companies, causing the delivery of the checks.

3. PPC did not collect wagers, operate gambling internet sites, calculate gambling winners or losers, or participate in the gambling business unrelated to the transmission of money from the offshore gambling companies to the bettors and vendors. (Stipulation, ECF No. 162.)

A hearing was held on Defendants' Objections to the Guideline Calculations on September 10, 2012. Defendants submitted a letter-brief on September 12, 2012 dealing with the issue of whether U.S.S.G. ยง 2S1.3 could ...


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