Case 1:10-cr-00600-DLI Document 343 Filed 01/08/14 Page 1 of 4 PageID #: 2041 U.S.

Department of Justice

United States Attorney Eastern District of New York

PSS:NR F. #2010R00609
271 Cadman Plaza East Brooklyn, New York 11201

January 8, 2014 By Hand and ECF

The Honorable Dora L. Irizarry United States District Court Eastern District of New York 225 Cadman Plaza East Brooklyn, New York 11201 Re: United States v. Seymour Eisenberg Docket Number 10-CR-600 (DLI)

Dear Judge Irizarry:

The government respectfully submits this letter to set forth its restitution recommendation in connection with sentencing in the above-referenced case. Restitution Is Mandatory In This Matter Restitution is mandatory in this case and the Court should impose an order of restitution in the amount of $2,354,623.00, made payable in pro rata share to the victims identified in Exhibit A to this submission. 18 U.S.C. 3553(a)(7). The government respectfully submits that the defendant should be held joint-and-severally liable for this amount with his co-defendants, Steven Moskowitz and Andrew Tepfer. As discussed below, the government has calculated this figure based on affidavits of loss submitted by victims in this matter. Under the Mandatory Victim Restitution Act ("MVRA"), 18 U.S.C. 3663A and 3664, this Court is required to impose an order of restitution in favor of the victims of the defendants crime for the full amount of their losses, without consideration of the defendants ability to pay that amount. 18 U.S.C. 3664(f)(1)(A) (In each order of restitution, the court shall order restitution to each victim in the full amount of each

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victims losses as determined by the court and without consideration of the economic circumstances of the defendant.); see United States v. Ekanem, 383 F. 3d 40, 44 (2d Cir. 2004). The government requests that the restitution be due immediately upon sentencing. Nevertheless, in ordering restitution, the Court must also fix a schedule for payment of restitution, and in doing so, must consider the following statutory factors: (A) the financial resources and other assets of the defendant, including whether any of these assets are jointly controlled; (B) projected earnings and other income of the defendant; and (C) any financial obligations of the defendant, including obligations to dependents. 18 U.S.C. 3664(f)(2). Although the sentencing court need not make detailed factual findings on each fact, the record must disclose some affirmative act or statement allowing an inference that the district court in fact considered the defendants ability to pay. United States v. Lucien, 347 F. 3d 45, 53 (2d Cir. 2003) (internal quotation marks omitted). The sentencing court may not satisfy this requirement merely by stating that it has reviewed information regarding the defendants financial condition set forth in the Pre-Sentence Investigation Report. See United States v. Tran, 234 F. 3d 798, 812 14 (2d Cir. 2000). Accordingly, the government requests that the restitution order state clearly that restitution is due immediately, and payable according to whatever schedule the Court deems appropriate. The Affidavits of Loss At the outset of this case, the government used print advertisement as well as a section of the website of the United States Attorneys Office for the Eastern District of New York to 2

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identify victims of the defendants fraud. To date, 109 individuals have identified themselves as victims. In anticipation of the sentencing proceeding, the government transmitted a blank Affidavit of Loss to each of those individuals. 1 The victims were asked to return completed Affidavits of Loss by no later than December 13, 2013. Upon the Courts granting of the request for an adjournment of the defendants previously scheduled sentence, the government sent a further request that victims submit any affidavit of loss immediately. To date, the government has received 51 completed Affidavits of Loss (the Completed Affidavits) from victims. The government has provided redacted copies of the Completed Affidavits to the Probation Department and defense counsel. 2 Using the information provided in the Completed Affidavits, the government has calculated a total restitution amount of $2,354,623.00. Exhibit A hereto sets forth, on a victim-by-victim basis, the amount of restitution due. To the extent the chart has multiple entries for some victims, this simply reflects the fact that the victim may have purchased Spongetech stock using different brokerage accounts. A summary of the calculation methodology follows.

The government has also used its Victim Notification System (VNS) to regularly update these individuals as to upcoming Court dates in this matter. As a number of the victims attached account statements and other supporting documentation to the Completed Affidavits, the documentation is relatively voluminous and has not been filed as an exhibit hereto. Should the Court wish the government to file the Completed Affidavits and provide courtesy copies to Chambers, the government will do so. 3
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The government arrived at the loss amount by calculating the total dollar value of Spongetech stock purchased by the victim during the time period of the Spongetech fraud charged in the Superseding Indictment (January 1, 2007 through May 30, 2010). To the extent that a victim sold Spongetech shares (and thereby recouped part of their loss) during that period, the proceeds of those sales were subtracted from the victims loss. Accordingly, the figure set forth in the loss amount column reflects the victims net losses. To verify the reliability of the Completed Affidavits, and its recommended restitution figure, the government has also compared the purchase and sale information provided in the Completed Affidavits with trading data for Spongtech shares obtained from broker dealers and clearing firms. The information provided by victims in the Completed Affidavits has been corroborated by the trading data. Conclusion For the foregoing reasons, the government respectfully requests that the Court enter an order of restitution in the amount of $2,354,623.00. Respectfully submitted, LORETTA E. LYNCH United States Attorney By: /s/ Nathan Reilly Assistant U.S. Attorney (718) 254-6196

cc:

John Meringolo, Esq. (via electronic mail) John Lanigan, U.S. Probation (via electronic mail) Patricia Sullivan, U.S. Probation (via electronic mail) 4