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GOVERNMENT'S RESPONSE TO DEFENDANT LAROUCHE 1/3

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SEP. 24 1990

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

UNITED STATES OF AMERICA

v.

LYNDON H. LAROUCHE

CR No. 88-0243-A

GOVERNMENT'S RESPONSE TO DEFENDANT'S LARQUCHE ' S RULE 35 MOTION

The United States of America, by undersigned counsel, hereby opposes defendant Lyndon H. LaRouche's Motion for Reduction of Sentence. Defendant seeks this reduction first on the basis of his age, health and life expectancy, and second, on anticipated actions by the Parole Commission. The government disagrees that either ground warrants a reduction.

I. AGE AND OTHER CONSIDERATIONS
It will come as no surprise to the court that the government opposes a reduction of LaRouche's sentence on grounds of age, health, life expectancy or other such sympathetic concerns. At the outset, the defendant's age and health were well known to the court at sentencing and certainly considered at that time. Nothing has changed .
The government opposes any reduction because LaRouche's crime warranted the sentence he received. Moreover, his utter lack of contrition shows that this defendant and his followers pose a real threat to society.
Presumably, the court might have hoped its sentence of LaRouche would serve any of several purposes. Perhaps, at least,

the defendants could acknowledge some responsibility for their actions, maybe even take some ameliorative steps. One might even hope the malevolent fundraising would stop. Of course, none of this has occurred.
LaRouche's present attitudes regarding his conviction were displayed when he testified in Virginia Circuit Court in Roanoke, on May 23, 1990. He stated:
I was convicted of charges of which the judge knew I was innocent. And he knowingly suppressed the evidence which would have proved my innocence. ... In my judgment, as a layman and as a political figure, he was corrupt in not recusing himself from that case the instant he decided to suppress the evidence which involved him personally which was relevant to the core of the charge.
LaRouche also described the Fourth Circuit's affirmance of his conviction as an example of "fascist law." So much for contrition, remorse, or any hope of rehabilitation.
Meanwhile, the fundraising continues, as viciously as ever. To be sure, the LaRouche organization stopped "borrowing" money when the Virginia State Securities Commission ordered them to stop issuing promissory notes in March of 1987. But the fundraising just mutated slightly. As the exhibits to the attached Parole Commission submission indicate, instead of promising repayment, defendant's followers simply have made whatever other false statements were necessary to "get the money." Michael Billington, combined with others, took $260,000 from an incompetent Pennsylvania retiree by falsely promising, among other things, that the "gift" would be tax deductible. Yoder v. Executive Intelligence Review, CA No. 88-1656 (M.D.

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Perm. Jan. 30, 1990) (finding of fact number 35). Similarly, while on bail pending appeal of her Virginia conviction, Rochelle Ascher talked an 82 year old Baltimore widow out of her $741,000 life savings.
It seems only fair to ask: When is this going to stop, and, when is this defendant going to use his undeniable sway with his followers to stem the bloodletting? The answer to these question apparently is never. This defendant's contempt for humanity {lacking the "moral fitness to survive") has not changed. He clearly feels no remorse over the frauds perpetuated in his name. He thus presents a real continuing danger to society.
To say the least, a reduction of sentence now would send the wrong message to LaRouche and his followers. By keeping him in jail, on the other hand, at least the court continues to make clear that LaRouche's action and those of his followers were wrong. And perhaps, someday, the defendant might even changed his ways and those of his followers.

II. PAROLE COMMISSION ACTIONS A. Factual Introduction:
At the outset, it seems important to clarify what the government and the Parole Commission have done in this case, and what the real effect of their actions have been and could be. The government filed a lengthy statement with the Parole Commission regarding defendants LaRouche, Wertz and Spannaus. A
None was filed for the four fundraising defendants Billington, Greenberg, Small and Rusenstein because their offense severity rating called for a 24 - 36 month sentence, resulting in all of them serving two-thirds of their sentence

copy of that submission, with all its exhibits is attached.
The purpose of the submission was to provide the Commission with information regarding the losses caused by the defendant's crimes, the impact of the losses on the victims, and the defendant's predilection to commit further crimes. The government argued that the offense level should be upgraded, that the salient factor scores were not a reliable prediction of future conduct in this case, and that the Commission should hold these defendants for the longest possible time. It is true that the government, after noting this Court's contrary finding, argued that the fraud here involved more than $1 million. That argument was not, however, merely "the same argument" as rejected by this court. While evidence from the trial was used to support the argument, it also relied on subsequent state convictions of both indicted and unindicted co-conspirators involving $1,145,650 in loans; a January, 1990, decision from the Middle District of Pennsylvania voiding a $260,000 "gift" obtained by Michael Billington on account of fraud; and persuasive evidence that variations on fraudulent fundraising continue until today, most notably including $741,000 recently obtained from a Baltimore widow by unindicted co-conspirator and convicted state court defendant Rochelle Ascher.
On defendant Spannaus, the Parole Commission declined to upgrade the offense severity level. It did, however, exercise its discretion to set his release date at 34 months, near the top of his 24 - 36 month range.
On defendant Wertz, the Commission concluded that the
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offense level should be increased, and that he should serve two-thirds of his sentence, which works out to 39.6 months. This, of course, is only 3.6 months greater than the top end of a Level V sentence.
No determination has yet been made regarding LaRouche. Even presuming the Commission were to determine that his offense severity level should be six, however, there would be no impact on his release date. The guideline range for a level six offender is 40 - 52 months; yet LaRouche's one-third minimum sentence is 60 months.
Hence, defendant seeks relief based on the highly speculative assumption that the Commission will substantially exceed its guidelines. Moreover, if the requested relief is granted and the Commission does not exceed its guidelines, the result will be a substantial reduction of the time LaRouche will spend in jail.
It should also be noted that defendants Spannaus and Wertz have availed themselves of the appropriate administrative relief. Both have appealed. B. Rule 35 Relief is Not Appropriate:
As a general rule, complaints about the execution of a sentence, including Parole Commission computation of release date, are not appropriately the subject of Rule 35 relief. United States v. Giddings. 740 F.2d Ill-Ill {9th Cir. 1984). Rather, that decision rests with the Parole Commission, whose decision is subject to appeal, 28 C.F.R. 2.26, 2.27, or collateral attack, 28 U.S.C. 2241. As the Supreme Court
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stated, after noting that Rule 35 does provide some modification authority to the Court:
The import of this statutory scheme is clear: The judge has no enforceable expectations with respect to the actual release of a sentenced.defendant short of his statutory term. The judge may well have expectations as to when release is likely. But the actual decision is not his to make, either at the time of sentencing or later if his expectations are not met. To require the Parole Commission to act in accordance with judicial expectations and to use collateral attacks as a mechanism for ensuring that these expectations are carried out, would substantially undermine the congressional decision to entrust release determinations to the Commission and not to the courts.
United States v. Addonizio. 442 U.S. 178, 190 (1979). Nonetheless, some district courts have granted Rule 35 relief when Parole Commission actions have frustrated the expectations of the sentencing judge at the time of sentencing. See United States v. Wigoda, 417 F. Supp. 276 (N.D. 111. 1976).
Rule 35 relief is particularly inappropriate here, where there has not yet been a Parole Commission determination. The time limits on Rule 35 motions implicitly prevent the Court from reviewing all parole determinations. As Addonizio states, that apparently is the scheme intended by Congress.
In any event, whatever may have been the court's expectation regarding offense severity, the Parole Commission always has discretion to exceed its guidelines, and that is the only possible basis on which their action could have any effect on the time LaRouche will serve. In exercising that discretion, the Commission certainly may take into account the full range of
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evidence and factors allowed by law. The Court should not, by the vehicle of a Rule 35 order, rob the Commission of that discretion, or artificially constrict the evidence it may
consider.
C. The Parole Commission's Determination Regarding Defendant Wertz was Correct:
The Parole Commission determined that Wertz' crime involved more than $1 million, a finding superficially at odds with this Court's ruling. The government believes this decision was correct, for the following reasons.
1. The Parole Commission may take into account evidence of
conduct going beyond the actual counts of conviction, including
related conduct. Peak v. Petrovsky. 734 F.2d 402, 404-05 (8th
Cir. 1984); Augustine v. Brewer, 821 F.2d 365 (7th Cir. 1987),
Robinson v. Hadden, 723 F.2d 59 (10th Cir. 1984). This court's
conclusion that the loss was limited to $294,000 was expressly
based on "the only ones [loans] that the jury has specifically
found to be fraudulent." The Commission's determination need not
be so limited.
2. The government presented arguments not made to this
court. For example, business records introduced at trial showing
"hardship cases" totalling $1,717,000 were offered as
circumstantial evidence of other persons who clearly expected
repayment and therefore must have been defrauded.
3. The government also presented evidence not even in
existence at the time of sentencing. This included evidence of
state court convictions which clearly encompassed additional

fraud perpetrated by the defendant's co-conspirators. The Parole Commission may consider such information. Maddox v. Commissioner, 821 F.2d 997 (5th Cir. 1987) (state convictions); 28 C.F.R. 2.20, Chapter 13, Subchapter A, n.4 (reasonably foreseeable co-conspirator's actions). It also included evidence of recent fundraising.
Accordingly, it is respectfully submitted that the Parole Commission is entitled to rely on this information and set LaRouche's sentence accordingly.

III. CONCLUSION
For the foregoing reasons, it is respectfully requested that defendant's sentence not be reduced.
Respectfully Submitted
HENRY E. HUDSON United States Attorney

:ENT s. 'ROBINSON
Assistant U.S. Attorney
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CERTIFICATE OF SERVICE BY MAIL
I HEREBY CERTIFY THAT I have made service of the
foregoing GOVERNMENT'S RESPONSE TO DEFENDANT'S LAROUCHE'S RULE 35 MOTION by depositing in the United States Post Office at Portland, Oregon, on September 21, 1990, a true exact, and full copy thereof, enclosed in an envelope with postage thereon prepaid, addressed as follows:
Odin P. Anderson
Anderson & Associates, P.C.
Attorneys at Law
Four Longfellow Place, Suite 3705

KENT S. ROBINSON Assistant U.S. Attorney
Boston, MA 02114

ATTACHMENT TO FORMS 792 SUBMITTED REGARDING PRISONERS
LYNDON H. LaRouche BOP No. 15204083
WILLIAM WERTZ BOP No. 15203083
EDWARD SPANNAUS BOP No. 15225083

The purpose of this memorandum is to set forth the government's position regarding the total loss suffered by and the true impact on the victims of the fraud scheme for which Lyndon LaRouche, Edward Spannaus and William Wertz stand convicted. A cogent statement of facts regarding their crime is contained in the Court of Appeals decision affirming their conviction. United States v.LaRouche, 896 F.2d 815 (4th Cir. 1990) . A. This Submission:
As the Commission undoubtedly is aware, the subject of a total loss figure was discussed, albeit briefly, at the time of sentencing in the District Court. The Presentence investigation Report had set forth a total of $32 million dollars. When the defendants objected to inclusion of that figure, it was stricken by the District Court, and replaced with the figure of $294,000. By way of explanation, in response to the government's assertion that the amount should be the larger figure, the court stated:
, . .[T]he only ones that the jury has specifically found to be fraudulent are these $294,000, and while we may assume that there were more than that out there, I think the defendant is entitled to the benefit of the doubt on that, and I think the $32 million figure characterized as representing the

number of fraudulently obtained loans ought to be stricken. I think the figure that has been fraudulently proved is $294,000.
I do not seek by this submission to quarrel with the court's finding that the figure of $294,000 represents the total of the amounts set forth in the ten substantive charges of fraud on which the jury made specific findings. Moreover, I would have to concede to the hypothetical possibility that not every one of the $32 million dollars borrowed during the scheme was fraudulently obtained. (At least one witness testified for the defense that he had not been defrauded.) But it is at least equally true that $294,000 cannot be viewed as an accurate picture of the total loss. To look only to the indicted counts, as did the District Court, substantially and improperly understates defendants' crime. The Parole Commission is not limited to considering only the actual counts of conviction. See, Peak v. Petrovsky. 734 F.2d 402, 404-405 (8th Cir. 1984} (may consider fraud in dismissed counts). Every court to confront the issue has concluded that the Commission may justifiably consider the defendant's total conduct, and related conduct. See, id. Augustine v. Brewer, 821 F.2d 365 {7th Cir.
In fact, this figure contains a computational error, resulting from a typographical error in the indictment. Count 10 refers to a $5,000 loan, where in fact the referred to transaction was for $15,000. This was a typographical error, which the court corrected at the time of trial. Indeed, the court of appeals discussed the sufficiency of evidence to establish this $15,000 loan. See United States v. LaRouche, supra. 896 F.2d at 821. The $294,000 figure was arrived at using the $5,000 amount. The additional $10,000 is added in as an additional loss in the following discussion.

1987); Robinson v. Hadden. 723 F.2d 59 (10th Cir. 1984). Any such consideration here leads inevitably to the conclusion that the fraud here was huge. Indeed, the government was permitted to argue as much to the jury, despite the objection of defense counsel:
The promises these defendants made resulted in $25 to $30 million being loaned to this organization by thousands of people ....
This is a case about thousands of people who lost tens of millions of dollars ....
That resulted in an enormous crime, a $30 million crime.
Finally, it must be noted that all defendants were convicted of a conspiracy of rather broad scope. It alleged borrowings of $30 million during the course of the conspiracy. And, as the Court of Appeals has noted, it was the policy of these defendants not to repay loans. See United States v. LaRouche, supra, 896 F.2d at 821. B. Additional Losses Proved During the Trial of these
Defendants:

1. Financial Losses of Victim Witnesses:
The $294,000 figure represents only the amounts
underlying the specific loan transactions which form the basis of Counts 2 through 11. But with one exception, each of these witnesses who testified as to those transactions made additional loans. Their trial testimony, and the documentary evidence they introduced, covered all their loans, not just the single indicted transactions. And their testimony was uniform as to all

transactions: They were acting on the same false promises in each transaction; in each, they were defrauded. All of this is supported by the trial transcript and exhibits which of course can be made available for direct inspection by the Commission. To ignore all transactions but the indicted counts significantly understates the conduct of these defendants and diminishes the very real injury suffered by these victims. I am confident that these victims would be happy to write to the Commission to further support their injuries, should the Commission desire such input.
Set forth below is a brief statement of the additional losses suffered by nine of the ten victims who testified at trial. In some instances, the solicitations leading to these loans were not made by indicted defendants. But in each such instance, the solicitations and actual transactions were admitted into evidence as further proof of the conspiracy.

a. Elizabeth Sexton: Additional Losses: $107,500
Count 6 of the indictment sets forth a $4,000 loan made by Elizabeth Sexton. This transaction was chosen for inclusion in the indictment for venue reasons and also because it was rather egregious. Ms. Sexton explained to defendant Rubenstein that she already had lent here life savings to the defendants and would have to borrow any additional money from the bank. That is precisely what she was told to do and in fact did. Prior to that time, relying on the defendants' false promises, she already had lent $107,500, her life savings.

b. Alan Rither; Additional Losses: $90,000
The single transaction underlying Count 3 of the indictment was chosen because it clearly implicated defendant Small. However, it was only one of six transactions, which totalled $100,000. All transactions were part of the same scheme, and all premised on the same false representations. Indeed, the six transactions, including that in Count 3, were recorded in a single $100,000 promissory note sent to Rither by the defendants. Clearly his total loss was $100,000, not merely $10,000.

c. Martha Van Sickle: Additional Losses $75,000
In December, 1985, Martha Van Sickle, in a single transaction, resulting from a specific series of false representations, loaned the organization $250,000. As a result of negotiations regarding repayment, however, that loan was recorded on two promissory notes, one for $200,000 (Count 8) and one for $50,000. Clearly, the later deserves equal consideration. In addition, prior to that large loan, Van Sickle had made three other loans totalling $25,000.

d. Cecilia Landegger: Additional Losses: $35,000
Cecilia Landegger made six separate loans,

totalling $45,000, only one of which, for $10,000 was included in the indictment (Count 7).
e. Lita Witt! Additional Losses: $5,500
Lita Witt made three loans all in response to the same investment solicitation, which totalled $10,500. One $5,000 loan (Count 4) was included in the indictment because of the direct involvement of defendant Billington,

f. Goodwill Post; Additional Losses: $22,000
Three loans totalling $12,000 were made by
Goodwill Post, prior to the $15,000 transaction underlying Count 10. As noted above (see footnote 1), only $5,000 of the loan involved in Count 10 was included in the original computation.

g. Audrey Carter; Additional Losses: $10,000
Audrey Carter made two $10,000 loans in response
to solicitations by defendant Billington, of which only one (Count 5) for economy's sake, was included in the indictment.

h. Dorothy Powers: Additional Losses: $10,025
Dorothy Powers made a series of at least five loans in response to solicitations from Michael Billington, totalling $40,025. A single $30,000 loan supported Count 2.

i. Max Harrell: Additional Losses: $15,000
Max Harrell made six loans totalling $15,000 prior to the $10,000 loan set forth in Count 11.
TOTAL ADDITIONAL LOSSES: $358,025
TOTAL LOSSES: $652,025

2. Impact on Victim Witnesses:
The bare recitation of facts above does little to illustrate the devastating impact of the defendants' crimes. Eight of the individuals listed above were retired at the time they loaned money to the defendants. The funds they lent were their retirement moneys -- what they needed to live on. In several cases, the fraud left them destitute, forced to rely on Social Security alone for the necessities of life. These persons lent their precious savings to the defendants because they were assured that they were making a safe and profitable investment. In fact, they were being robbed. It is not an exaggeration to state that the lives of these persons were ruined, at a time when they should have been able to enjoy the comforts of retirement and the benefits of a life's work.
Alan Rither, the one individual above not retired, nonetheless was in a similar posture. He was investing funds saved by his aged and by then infirm father. The proceeds from the investments were intended both to support his father and to leave something to his heirs. Rither, an attorney, was persuaded that the defendants were a safe and secure repository for the proceeds of his father's life's work. In fact those savings of a lifetime were quickly gone.
I have attached as exhibits to this submission letters written by a few of theses victims to the defendants and their co-conspirators. These are drawn from the trial exhibits and retain their markings as such. These letters are a small selection from the desperate, extensive efforts these victims made to attempt to recover their losses. While they predominantly recount the terms of failed promises, they also contain insights into the true damage caused:

a. Exhibit Ifol; Elizabeth Sexton to Joyce Rubenstein:

I had no intention of letting all my capital go as I needed the income from that money, and still do, to live. . . .
When you were sure I had reached the bottom of my money, last summer, you asked me to borrow $50,000 from a bank and laughed at me when I said I didn't approve of borrowing because I was afraid of being in debt. . . .
GDI has no right to keep "my" money. No one in their right mind would "give" all of their money away when it was needed for survival.

b. Exhibit 2(g] fPartial1; Lita Witt to Lyndon
LaRouche, et al.:
Since I depend on interest from my savings for a great part of my income and living expenses, you can see that my loss has been more than I need to bear.

c. Exhibit 2fhl (Partial): Lita Witt to J. Phillip
Rubenstein:
Since these loans represent the greater part of my estate I would appreciate any help you will give to get these paid with all of the interest due.

d. Exhibit 10(1) : Goodwill Post to Chris Curtis:
I desperately need $513.00 by October 3rd. I must have it and as you know I told you I had to have the interest from what I loaned to EIR or whatever.

e. Exhibit ll(z) : Martha Van Sickle to Don Phau:
Since I appreciated the problems you were having raising funds, I said that if I received the interest ON TIME I would try to
exist I could only exist for I have
been reduced to living on my Social Security, (ellipses in original) . . .
I do not choose to lose my life savings and my home to meet the payments on the money I borrowed to make the $200,000 short term loan to your organization.

f. Exhibit l?m ; Audrey Carter to J. Phillip
Rubenstein:
It so happens that I could barely afford these loans at 10% interest paid quarterly, that I suffered some anxiety during efforts to collect the first quarterly interest payments, and I desperately need the scheduled quarterly payments in order to cover my daily living expenses.
g. Exhibit 17fkl : Audrey Carter to George Canning:
Maybe so, but Mr. LaRouche's problems are immaterial to me. I have my own problems and need to keep up my living expenses which are unusually high because I am confined to my bed and have full time household help and nursing care.
This predominance of aged and retired victims is not the result of some careful selection by the prosecution. On the contrary, this is a representative sampling of victims. This was a scheme that preyed on the elderly. In part this may be because the elderly more than any other segment of society have accumulated large amounts of liquid assets. But it is also because they are so often vulnerable to high pressure tactics and glib con jobs.
The pursuit of these victims by the defendants was relentless. Consider the letter of Elizabeth Sexton, Exhibit l(o), attached. After making initial contributions and loans, she was called by Joyce Rubenstein "nearly every day." After those calls persuaded Sexton to lend her life savings, Rubenstein asked her to borrow an additional $50,000 and turn it over to the organization! Ultimately, Sexton did borrow $4,000, upon the promise from Rubenstein that the organization would make all payments on the loan. Of course, it did not. This course of dealing, which not only robbed Sexton's life savings but left her in debt, was aptly termed by Ms. Sexton as "cruel and dishonest." The analogy of sharks sensing blood in the water comes to mind.
These victims, by the way, did receive some interest payments on their loans. But only as an inducement to obtain further loans. Once the victims stopped lending, they were cut off. No more interest payments. No responses to their pleas for repayment. LaRouche personally responded to Sexton's pleas by claiming that he had no control over the corporation to which Sexton lent money, and that it had no available funds in any event. The jury found these claims to be fraudulent (Count 12).
That LaRouche, Spannaus and Wertz were responsible for, and in a position to foresee this cynical, cruel treatment was amply proven at trial. LaRouche exhorted his co-conspirators to use "any means short of thievery to thuggery to get that money." Spannaus responded to a lender's complaints about nonpayment by saying they had "no right" to return of their money. And in the quotation from the trial record which most aptly summarized the cruelty of this whole scheme, Wertz adopted the following statement of one of his fund raisers:
The trouble with you people at the national center is you are too soft. You identify too much with people's concerns and their problems. You have to have only one thing on your mind. That is getting the money. No matter what the person you are talking to says, get the money. If you are talking to a little old lady and she says she is going to lose her house, ignore it. Get the money.
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If you are talking to an unemployed worker who says he has got to feed, you know,
a dozen children, forget it. Get the money . . . Most of these people are immoral anyway. This is the most moral thing they have ever done is to give you money.
Wertz also expressed the attitude which pervaded the organization's response to repayment requests:
I don't want to hear any more God damned complaints about loan repays. You job is to raise money. You job is to figure out how to make the quota. And that's what I want to hear from you. . . Look, people would ask for their money back right now, but we are in the midst of a war fighting for survival for the human race. People who ask for their money back now are immoral. We are at war. In war, there are casualties. You have to tell you [lenders] that.

3. Additional Losses and Additional Victims:
There was substantial evidence to support the $32 million figure originally included in the PSR. That amount represented the total in loans taken during the conspiracy. Given the articulated policy of the organization not to repay loans, and the actual failure to make virtually any loan repayment, it was no great stretch to conclude that all had been fraudulently obtained. The District Court's contrary conclusion apparently resulted from the absence of specific information about the solicitation on which persons relied in making their loans. It is at least hypothetically possible that someone made a "loan", recorded by a promissory note containing specific terms despite having been told they would not get their money back. But it goes too far to conclude that no other frauds
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were proven. There was abundant evidence presented at trial that scores of other victims were defrauded of millions more dollars. I note just one example below.
Wayne Hintz was a member of the LaRouche organization until approximately June, 1986. Prior to his departure, Hintz served as the person within the organization charged with the responsibility of keeping track of loan repayments that were becoming due. It should be emphasized that he did not keep track of all loan repayments; no one did that. In other words there was not even any attempt made to pay people as their loans became due. Hintz had a more narrow job: Keep track of the most pressing past due loans on which complaints or requests for payment had been made. Hintz prepared lists of proposed payments on a weekly basis. He separated his proposed payments into several categories of lenders. Among those were the "hardship" cases, comprised of lenders in dire financial straights because of non payment. Arguably, any lender who ever found their way onto any of Hintz's lists could be treated as a fraud victim, because they were seeking repayment. But the approach here is more conservative. The "hardship" cases present a compelling circumstantial showing that persons expected their money back, and could not have received any of the disclaimers that would have made their "loans" nonfraudulent. There are persons who loaned so much that they were foregoing the necessities of life because they were not being repaid. Clearly, given the showing of consistent misrepresentation, and the absence of meaningful
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repayments, there is substantial evidence to conclude these persons were defrauded.
Attached to this memorandum is Government's Exhibit 43-D. It is but one of the dozens of memos written by Wayne Hintz offered at trial. These memos were accepted into evidence because they represented the business records of the LaRouche organization's corporate entities. Moreover, they were offered in a related New York case as statements of a co-conspirator. But on the business records basis alone, it is fair to attribute to these defendants that which is shown by the records of the organization they controlled.
Exhibit 43-D sets forth 64 persons who loaned a total of $1,717,150. The exhibit contains a brief statement of the circumstances of each lender, and the stories are tragic. If the Commission considers only one of the numerous exhibits attached to this memo, this should be it. These people were devastated by the defendants and their co-conspirators. Medical treatments were skipped; houses were lost; the minimal necessities of life were robbed from these people. Clearly, this was a crime of wide scope, with a significant financial total, and a profound human impact.
The total on exhibit 43-D contains little double counting with the number above. Only Dorothy Powers $35,000 loans are included in its figure. Hence, if the loans testified to are added to those set forth in Exhibit 43-D, the total would be $2,334,175. And this is only one of Hintz's memos.
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C. Additional Losses Proven in Other Litigation
As set forth above, the government contends that the evidence presented at the trial of these defendants proved losses in the millions of dollars. But placing that issue aside, there have been other adjudications resulting from the very fraud conspiracy for which defendants were convicted. The state of Virginia has brought criminal cases charging fraudulent solicitations of loans, involving an overlap of proof, witnesses and even one defendant. As explained further below, these prosecutions essentially involved further substantive charges arising from the conspiracy for which LaRouche, Wertz and Spannaus clearly were responsible. See United States v. LaRouche. supra. As such, the losses adjudicated and proven in those cases should be taken into account by the Commission. State convictions may be considered in determining the defendants' total offense. Maddox v. Commission. 821 F.2d 997 {5th Cir. 1987). Moreover, actions of co-conspirators over which the defendant has some control and which are reasonably foreseeable may properly be attributed to the defendant. 28 CPR S 2.20 Chapter 13, Subchapter A, n.4; Augustine v. Brewer, 821 F.2d 365, 370 (7th Cir. 1987).
It is important to note that the criminal convictions discussed below took place after the Alexandria conviction and, accordingly, were not brought to the attention of the sentencing court.
The State of Virginia brought a series of prosecutions of
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LaRouche fund raisers in early 1987 which, as the result of protracted pretrial proceedings, did not gc to trial until 1989. At this writing, three cases have been tried resulting in guilty verdicts. The losses proven in those cases are set forth below. (The trial records of these cases, consisting of many thousands of pages, can of course be made available for the Commission's review.) All of these losses are properly considered in determining the total impact of the conspiracy. All of these convictions are based on loans obtained during the time frame of the conspiracy proven in the federal case. All the convicted defendants were co-conspirators, about whom proof was offered in the federal trial. These are the very persons and acts for which the Court of Appeals held LaRouche, Wertz and Spannaus properly accountable, see United States v. LaRouche, supra, 896 F.2d at 821.

a. Michael Billington;
Michael Billington was an indicted co-conspirator of the present defendants who was also tried and convicted in Virginia State Court. Each of the present defendants was convicted of substantive offenses for which Billington was the actual fundraiser, solely as a result of their positions of authority and control over his actions. (Counts 2, 4, 5). Clearly their culpability for his conduct has been established within the meaning of the regulations and case law cited above. The following lists the witnesses who testified against Billington at his state trial (excluding those who also testified
15

federally) and the total amount each loaned as a result of his fraudulent solicitations.
a. Dorothy Bechtel: $24,390
b. Margaret Begnen: 70,000
c. C. Fortenberry: 5,000
d. Anna Geiger: 15,000
e. Edith Gradt: 10,000
f. Jimmie Hughes: 10,000
g. Eugene Tate: 6,000
h. William Weyler: 10,000
i. Franklin Wilson: 1.000
TOTAL $151,000

2. Rochelle Asher:
Rochelle Asher was an unindicted co-conspirator in the federal case. She is identified as such in Overt Acts 12 and 13 of the conspiracy charge. Statements she made to a government witness were admitted into evidence in the federal trial under the co-conspirator exception to the hearsay rule. Thus, there has been a judicial determination of her membership in the conspiracy. Moreover, those overt acts and the corresponding proof established that Asher was operating under the direct supervision of Wertz and played a role in instructing others how to solicit loans. Clearly, her activity may properly be attributed to her superiors. The following lists amounts testified to by witnesses at her trial (excluding two counted above under Billington and an undercover Virginia State Police
16

Officer):

a. Edward Allen: $361,000
(Excludes investments
in real estate limited partnership.)
b. Curtis Bolton: 20,000
(Excludes real estate
partnership.)
c. Mims Brantly 86,000
(Figure excludes $5,000
principal repayment.)
d. Welton Bryant 1,500
e. Robert Burton 127,846,87
(Figure excludes
repayment.)
f. Anthony Cotterino 30,000
g. Edward Elliot 14,000
h. John Herndon 5,000
i. Robert Hiatt 8,750
j. Charles Keathley 4,500
k. John Marymount 4,000
1. Marion McRinch 2,500
m. Jack Michaely 1,000
n. Earle Murray 72,000
o. Carlos Newell 2,500
p. Glen Thompson 6,000
q. Cathleen Waddell 29,000
r. Jackie Waddell 500
s. Robert Waddell 6,000
t. Robert Ware 9,000
TOTAL $791,096.87

3. Donald Phau:
Donald Phau was not a fundraiser having direct contact with lenders. Rather, he worked in the finance office of the LaRouche organization and was primarily responsible for disbursing the organization's limited funds (which almost never went for the payment of loans). He was prosecuted based on promissory notes or letters of indebtedness he issued and signed in which lenders were assured of certain payment, on specific dates and at specific rates. Donald Phau was identified at the federal trial, through Richard Welsh's testimony, as the individual primarily responsible for budgeting the organizations's limited disbursements. His actions were described as subservient to the National Executive Committee, the organization's governing body, which had as members Spannaus and Wertz, with LaRouche as its chairman. Phau signed some or all of the promissory notes or letters of indebtedness issued to the following lenders listed above: Edward Allen, Curtis Bolton, Mims Brantly, John Marymount and Martha Van Sickle, In addition, Phau signed at least one note to Mary Lou Hines, who testified at his trial. Her total losses, both on that note and all others, is not in dispute. Representatives of the various LaRouche entities signed a confessed judgment showing a debt to her of $101,553.55. Another individual who testified at Phau's trial was Arthur Hawkes. Among the several solicitors who obtained money from Hawkes was Joyce Rubenstein. Phau wrote a number of letters to Hawkes which perpetuated and assisted the fraud
L8

scheme. Hawkes lent a total {excluding real estate partnership)
of $102,000.
TOTAL LOSSES PROVEN IN VIRGINIA LITIGATION: $1,145,650.42

D. Continuing Fraud;
The LaRouche organization stopped borrowing money in the manner described in the indictment in early 1987. At that time, the Virginia Securities Commission prohibited them from issuing any more letters of indebtedness and two of the principal borrowing agencies were forced into bankruptcy. One would have hoped that the fraud, too, would have ended at that point, but it did not, and has not. This appears to be a case where the criminal prosecution served not as a deterrent to committing further crimes, but rather as an educational tool on how to commit crimes more effectively.
Once they stopped borrowing the LaRouche fundraisers nonetheless worked just as aggressively. And although they stopped making false promises of repayment (or at least stopped putting them on paper), they nonetheless have been making whatever false statements they needed to "get the money. "
Attached as yet another exhibit to this memorandum is a recent (January, 1990) ruling by the United States District Court for the Middle District of Pennsylvania (Exhibit A). It voided a gift of $260,000 worth of stock made by an incompetent 88 year old to the LaRouche organization. The solicitations were made, in part, by the defendant Billington. The court found that the solicitations had included the misrepresentation that the gifts
19

would be deductible charitable contributions. A distressingly similar story is contained in the attached May 21, 1990, Washington Post article (Exhibit B). It details how Rochelle Asher, during 1989, took an 82 year old Baltimore widow for $741,000. Although this case has not yet progressed to litigation, it is apparent it contains the same elements as the incident above: overbearing solicitations on a fragile elderly person; making whatever promises are necessary to bankrupt the poor victim.
These defendants properly can be held accountable at least for the $260,000 which a court has found to have been fraudulently obtained. The solicitations occurred prior to the Alexandria trial, when each defendant still held their respective positions of authority in the organization.
Even if these amounts cannot be counted, these subsequent frauds should make something very clear to the Commission. These defendants have not stopped; they have simply mutated their program slightly and committed fraud in new forms. That is exactly what will happen if they are released from prison. E-

Conclusion:
This memorandum provides the Commission with a series of substantial showings regarding the total loss suffered as the result of the defendants' conduct. This conservative approach results in the following (with all double counting removed):
1. Indictment count losses. $ 294,000
2. Additional losses to
testifying victims. 358,025
20

3. "Hardship" Losses established
through business records. 1,717,150
4. Losses proven in
Virginia litigation. 1.145.650
GRAND TOTAL: $3,514,842
It is respectfully submitted that this offense should be
graded as a Category Six.
I cannot dispute the absence of prior convictions against these defendants; hence, I cannot contest the salient factor score. But I do believe that the parole potential of these defendants cannot be measured by their prior record. This is not a typical crime and these are not typical defendants.
None of the defendants have ever admitted to any wrong doing. None have showed contrition or remorse. On the contrary, they have aggressively contended that they are the victims of a political vendetta (a claim repeatedly rejected by the courts). None have taken any steps to stem the bloodletting represented by the continuing frauds of their subordinates Billington and Asher. They simply do not regard themselves as bound by the same laws as the rest of us.
This case does not present the Commission with the need to do a careful, precise assessment of future potential. On the contrary, it establishes to a moral certainty that the defendants will break the law again. The contempt for humanity they have shown has not changed. Their belief that their need for money overrides the interest of individuals in their own property has not changed. It is just a question of who, and when, they will rob again.
21

It is respectfully submitted that the salient factor scores of these individuals? ajre act reliable predictors of future conduct. Accordingly, this case presents extraordinary circumstances calling for the Commission to arrive at a release date outside the guidelines.
Whatever range the Commission employs, the release date arrived at should be at the highest end of the applicable range. Society has the right to be protected from these defendants. Their sentence has not served its deterrent effect until the defendants and the organization they control stops stealing, and until they acknowledge that they have done wrong. They have not shown themselves entitled to re-enter society.
Respectfully submitted.
KENT S- ROBINSON Assistant U. S. Attorney
22

60 Suffield Meadow Drive Suffield, CT 06073 April 5, 1986

Dear Joyce,
Since you are the only one I have had any financial dealings with I am directing this letter to you.
I am a confused patriot. I tried to help and, it appears, was de^royed in my effort. I was easily persuaded to help with the publication of, DOPE, INC. because of my three young grandchildren who are faced with the ever present temptation of drugs* It was in good faith that I loaned GDI some of my money for that purpose, but, 1 had no intention of letting all my capital go as I needed the income from that money, and still do, to live. You cajoled me steadily and relentlessly by phoning nearly every day. You told me that my money would be safer and worth more with GDI than in my bank or my investment house* You said the more money I would lend GDI the more money I would make . You finally offered to pay \'?$% interest corapouned quarterly and payable with the principle and promised I would have it in a year. It seemed that if I would help GDI get the book, DOPE, INC., printed then GDI would help me. It has turned out to be a one way street. DOPE', IMC, is off the press and the year is up for the '1100,000 loan and no payment has been made to me.
When you were sure I had reached the bottom of my money, last summer, you asked me to borrow $50,OGO from a bank and laughed at me when I said I didn1t approve of borrowing because I was afraid of being in debt. You rf&id there was nothing to fear as GDI would faithfully meet each monthly payment. I tried borrowing the money and, as you know, when the bank became too inquisitive you called it off.
A month later you urged me to try another bank with the same pledge of meeting each monthly payment. I found I could get a tiif,000 loan without any questions asked. You settled for that. The first payment came, as promised, but I had to ask for the next two. When- the fourth payment was over-due I received a phone call from Bob FrimacK appealing
for more money. I asked where ray fourth payment was and he told- me that

GDI was finished making payments on the loan. That adverse decision left me in debt. Just where I was afraid to be! It was a cruel and dishonest thing to do. Imagine the hurt that overwhelmed me when I realized my dear friend, Joyce, had let me down. All the high ideals and worthy causes of Kr. LaKouche and the GDI suddenly seemed ambiguous.
When April 13th arrived, the day ray ilOO.OOO note was due, no one was honest or courteous enough to get in touch with me. Had I left my money where it was, before the smooth talk, the money would still be there plus the interest it would have earned and,also, with the option to withdraw part or all of it at will. A much healthier financial position for -me than the mess I have been put in by GDI. GDI has no right to keep my money. Mo one in their right mind would 'give1 all of their money av/ay when it is needed for survival* I need not remind you that I am not wealthy, that I live modestly. you know as you have been a #uest j.n mv horn* and I shudder to think of the distressing predicament I would be in. if the Ii50,000 loan gone through.

How can Mr, Laitouche be so sympathetic to the plight of the farmers aid the problems of our oilmen and be so insensitive to the undoing of an elderly patriot brought on by lies and deceit? Can this shocking behavior result from his orders or is he blind to the actions of his workers? With the recent adverse publicity in the liberal press it would seem only proper for Mr. LaRouche to honor his commitments and those made by his agents. How can he expect me, and the others who have been victimized, to advance his causes when he, or you, are at variance with his professed principles?
Thank you for trading this letter. I would appreciate an immediate answer.
( Elizabeth A. Sexton )

Sincerely,

60 Suffield Meadow Drive, Suffield, CT 06078 May 10, 1986

London H. LaRouche, Jr.,
Founder and Contributing Editor,
EIR
1612 K Street N.IV.
Suite 300
Washington, D.C. 20006

;OOVBKNMCK EXHIBIT
9

Dear Mr. LaRouche,
I would like to congratulate you on the way you handled yourself on Larry King's television show last evening. Anyone who saw you would have been impressed. You answered all questions openly and without hesitation so I hope you will be as straightforward with me.
Are' you aware that GDI holds money,that has been loaned to them, beyond the due date? I loaned ray entire savings to GDI for one year and now that the year is up, on the first "part of my loan, I am being ignored. Are you aware that CDI asks patriots to borrow money on,the promise that CDI will make all payments and then renege on that promise? If you are unaware of these practices then you should acquaint yourself as your intelligence and integrity is being injured.
Tjwas happy to loan CDI the money I had been living on. It seemed the right thing to do at the time. I was made to believe ray money would be returned at the end of one year. It shouldn't be necessary for me to t*ll you how I have been hurt but it is essential that you, and the otter candidates, see to it that all obligations be observed, Trust and honesty la vital to the voters in this country.
Enclosed is a copy of the letter I sent to Joyce Wubinstein in the CDI Chicago office. She is a charming, talented woman and I loved her as a daughter. I had faith in every word she told me until she failed to keep her solemn promises. It broke my heart. Joyce has chosen not to answer my letter. I would appreciate a reply from you* Thank you.
Sincerely,

2426 ffest Tenth Dallas, Texas 75208
June 5, 1986
Mr. Lyndon H, LaRouche
EIR
20 S. King Street, 4th Floor
Leesburg, Va. 22075
Re: Note dated May 10, 1985 from GDI in amount of $5500.00 @12% interest payable quarterly Solicited and signed by Anita Gallagher
^
Note dated August 11, 1985 from C.D.I, for $5,000.00
(12% interest payable quarterly
Solicited and signed by Michael Billington and George Canning
Dear Mr. LaRouche:
At your request on May 30, 1986 Mr. Allen R. Ogden called me concerning the above notes. I had tried numerous times to reach Anita Gallagher and George Canning when I did aot receive the interest on the above notes on their due dates.
Note of $5500.00: To date I have received only three interest payments of $165.00 each, all of which have been late. Now the fourth payment of interest was due on May 10, 1986, and the note matured the same date!

Note of $5,000.00: I have received only one quarterly payment of interest - $150.00 - which was due in November but not received until December, 1985. This note will mature In August, 1986.
Mr. Ogden asked that I extend the $5500.00 note until August 10, 1986, but I told him I would agree to this extension only if all interest due on both notes be paid immediately, the total amount being $465.00.
Mr, LaRouche, both Ms. Gallagher and Mr. Billington assured me that my noney would be safe with the company and that I would surely receive my interest when it became due. I am enclosing a copy of lla. Gallagher's letter explaining to me what my money would be used for.
Since I depend on interest from my savings for a great part of my income and living expense, you can see that ray loss has seen more than I need to bear.
2 GOVERNMENT EXHIBIT

Mr. Lyndon H. LaRouche June S, 1986
Page 2
Very truly yours,
Lffrmml (Miss) Lita Witt
Enc.
cc: Ms. Anita Gallagher
Mr. Michael Billington Mr. George Canning

2426 W. Tenth Dallas, Texas 75211
July 12, 1986
Caucus Distributors, Inc. P. 0. Box 1234 Leesburg, Va. 22075
Attention: Mr. Canning
Re: $5.000 Loan dated August 10, 1985 for 1 year At 12% interest payable quarterly
Dear Mr. Canning:
Thank you for GDI check No. 4519 dated July 2, 1986 in amount of $250.00, which was signed by you and marked for "interest".
.This interest was to be paid quarterly, the first payment being due in November, 1985 in amount of $150.00, but was not received until December, 1985, I am crediting $150.00 of the $250.00 check to the second quarter interest which was due in February, 1986 and $100.00 to the third quarter interest which was due in May, leaving $50.00 still due for the third quarter.
I would like to remind you that your note of $5,000 will mature on August 10, 1986 along with the $5o.OO balance of third quarter interest and $150.00 for the fourth quarter interest making a total of $5200,00 I am hoping that you will take care of this obligation at the time it is due.
Thank you again for your check for $250.00.
Very truly yours,
(Miss) Lita Witt LW:mml

; 0OVUNMENT

2426 (Vest Tenth Dallas, Texas 75211
August 18, 1986
Mr. J. Philip Rubinstein, President
Caucus Distributors, Inc.
P. 0. Box 748
Attn. CCAC Radio City Station
New York, New York 10101
Re: Loan of $5500.00 matured May XO, 1986
and Loan of 55,000.00 matured August 10, 1986
Dear Mr, Rubinstein:
Since receiving your letter of May 20, 1986 (which I received shortly before June 9, 1986) I realize that I have been writing to the wrong person concerning the past due interest and the maturity dates of the above loans.
In your letter you address me as "Supporter", which has never been my intention. Both Ms. Gallagher and Mr. Billington assured me that my money would be a safe investment with GDI and I could be assured that I IIP 12'* inLciVBt would (>e pnid promntly. I nrn pnelo.s-in cony of my lc!;Lor of June 5, l&f'A* to Mr. Lyndon B, LaRourhe, with copies to Ms. Ani ta Gal lagher. fir. Michael Bi1 ling ton and Mr. George Canning. The let ter to Mr. LaRouche was sent certified mail, but was returned to me marked "refused". The copy to Ms. Gallagher was also sent certified mail and was returned to me unopened.
Since these loans represent the greater part of my estate I would appreciate any help you will give to get these paid with all of the interest due. As you know, any unpaid interest is added to the note and is accruing interest at 12%.
Thnnk you for your prompt attention to this matter, and may I please hear from you soon?
Very truly yours ,
(Miss) Lita Witt LT:mmJ. Enc.

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