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Case 1:06-cr-00001-ESH

Document 51

Filed 05/21/2009

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA

v. JACK A. ABRAMOFF, Defendant.

: : : : : : : : :

06cr001 (ESH)

Motion For Immediate Modification of Restitution Order The United States, by and through its undersigned attorneys, moves the Court to immediately modify the terms of Mr. Abramoff’s restitution order. Yesterday, the government learned that Mr. Abramoff received a substantial refund from the Internal Revenue Service (“IRS”), a large portion of which he and his spouse spent before informing the government of its receipt. For the reasons set forth below, we ask the Court to immediately modify Mr. Abramoff’s restitution order to (1) order Mr. Abramoff and his family to cease spending whatever remains from the IRS refund; (2) require Mr. Abramoff to provide an accounting of the payments he has made; (3) modify the current restitution order to require Mr. Abramoff to provide immediate notice to the Court of any additional assets or debts he or his immediate family receives or incurs which are valued at $2,500 or more; (4) require Mr. Abramoff to obtain Court approval prior to he or his immediate family spending sums of $2,500 or more. On September 9, 2008, the Court imposed sentence upon Mr. Abramoff, and included in the sentence an order of restitution. (Docket No. 48-2). The restitution order held Mr. Abramoff liable for losses of $23,134,695, a portion of which was joint and several liability together with

Case 1:06-cr-00001-ESH

Document 51

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Michael Scanlon. In light of Mr. Abramoff’s current and anticipated financial condition, the payment schedule in the September 2008 order required Mr. Abramoff to begin making payments upon his release from prison. (Id. at 2). Further, the judgment required Mr. Abramoff to notify the Court and the government attorney within 30 days of material changes in economic circumstances. (Docket No. 48-1 at 1). On May 20, 2009, counsel for Mr. Abramoff advised the government that Mr. Abramoff and Mrs. Abramoff had received a refund from the IRS totaling $520,189. Based on what we learned from defense counsel on May 20, it appears that the following occurred. Around May 4, 2009, Mr. Abramoff’s wife received the refund check from the IRS. They advise us that, during the ensuing two weeks, Mrs. Abramoff allegedly paid the following non-restitution creditors: • $104,000 toward accounting expenses owed to Mendelson & Mendelson (Mr. Abramoff’s accounting firm); • • • • • • • • • $87,500 to repay loans from Mr. Abramoff’s father; $75,000 toward legal expenses owed to McDermott, Will & Emery, LLP; $50,000 toward back taxes owed to the State of Maryland; $47,000 toward a credit card balance held by Bank of America; $25,000 toward legal expenses owed to Zuckerman Spaeder, LLP; $22,000 toward property taxes; $5,000 to repay a loan from Michael Herson; $5,000 toward tuition expenses at Hebrew Academy; and $1,500 to repay a loan from the Franco Foundation.

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Counsel for the United States was aware that Mr. Abramoff had applied to the IRS for a refund, and the IRS was aware of Mr. Abramoff’s restitution obligations. Regardless of whether the refund should have been paid to Mr. Abramoff, Mr. Abramoff was required by statute to apply the value of that refund to his restitution obligation, notwithstanding that the money was received while he was in prison and before the payment schedule had taken effect. See 18 U.S.C. § 3664(n) (requiring a person to apply the value of any substantial resources which he receives from any source at any time to his restitution obligation). The restitution order is treated as a tax lien in favor of the United States on all property and rights to property of Mr. Abramoff. 18 U.S.C. § 3613(c). Before the government takes a final position on whether any of the money already paid out should be disgorged so that it could be used to satisfy Mr. Abramoff’s restitution obligations, the parties and the Court would benefit from more information about the nature of these creditors’ interests, how and when the interests arose, what steps were taken to perfect these interests, and what portion of the debts were incurred after the Court’s original restitution order. Accordingly, we respectfully request the Court to (1) order Mr. Abramoff and his family to cease spending whatever remains from the IRS refund; (2) require Mr. Abramoff to provide an accounting documenting the nature of the debts paid above, including when they were incurred; (3) modify the current restitution order to require Mr. Abramoff to provide immediate notice to the Court of any additional assets or obligations he or his immediate family receives or incurs which are valued at $2,500 or more; (4) require Mr. Abramoff to obtain Court approval prior to he or his immediate family spending sums of $2,500 or more.

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In accordance with our obligations, we are providing a copy of this filing to the victims owed restitution so that they are notified of the change in Mr. Abramoff’s financial circumstances. See 18 U.S.C. § 3664(k) (requiring the government to certify notice to victims). A proposed order is attached.

Dated this 21st day of May, 2009. WILLIAM M. WELCH II Chief, Public Integrity Section STEVEN A. TYRRELL Chief, Fraud Section __/s/ (Mary K. Butler)_______ Mary K. Butler M. Kendall Day Nathaniel B. Edmonds Trial Attorneys Criminal Division U.S. Department of Justice

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CERTIFICATE OF SERVICE I, M. Kendall Day, certify that on May 21, 2009, notice of the filing of the foregoing was electronically served on counsel for the defendant through the CM/ECF system. Abbe D. Lowell, Esq. Pamela J. Marple, Esq. Attorneys for Defendant Abramoff adlowell@mwe.com pmraple@mwe.com

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA

v. JACK A. ABRAMOFF, Defendant.

: : : : : : : : :

06cr001 (ESH)

Proposed Order By motion dated May 21st, 2009, the government moved for an order modifying the restitution order imposed by the Court at the defendant’s sentencing on September 9, 2008. Having read and considered the government’s motion, and for the reasons stated therein, the Court hereby RULES as follows: 1. 2. The government’s motion to modify the restitution order (Docket No. 51) is GRANTED; Until further Order of this Court, Mr. Abramoff and his family are directed to cease spending whatever remains from the IRS refund which is described in the government’s motion; 3. Within 7 days from the date of this Order, Mr. Abramoff shall provide an accounting documenting the nature of the expenditures already made using the IRS refund, including any information about whether the expenses paid were debts and when and how those debts were incurred; 4. The prior order of restitution (Docket No. 48-2) remains in full effect, but it is modified as follows: 6

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a.

Mr. Abramoff shall provide notice to the Court within one business day of the receipt or obligation by Mr. Abramoff and his immediate family of any additional assets or debts he or his immediate family receives or incurs which are valued at $2,500 or more;

b.

Mr. Abramoff shall obtain Court approval prior to he or his immediate family spending sums of $2,500 or more; and

c.

If there is any portion of the prior restitution order which is inconsistent with these modifications, this Order controls.

It is so ORDERED this _____ day of May, 2009.

_____________________________ Ellen Segal Huvelle United States District Judge

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