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United States v. Fruit

United States District Court, D. Arizona

March 8, 2019

United States of America, Plaintiff,
v.
Walter Scott Fruit, Defendant.

          REPORT AND RECOMMENDATION

          Honorable Bruce G. Macdonald United States Magistrate Judge.

         This matter was referred to Magistrate Judge Macdonald for a judgment debtor's examination and consideration of subsequent issues related to the enforcement of restitution. See Order 9/5/2017 (Doc. 465); Order 8/30/2018 (Doc. 504); see also LRCiv. 72.2. The Government has filed its Status Report (Doc. 496) and Defendant has responded (Doc. 505). On November 14, 2018, the Court held a status conference in this matter. Minute Entry 11/13/2018 (Doc. 509). In late January 2019, the Court spoke with Defendant's Probation Officer, and a second status conference was held on March 1, 2019.[1] See Minute Entry 3/1/2019 (Doc. 519). Having considered the Government's submissions, the argument of counsel, and the input of Probation, this matter is ripe for adjudication.

         As an initial matter, there are no currently pending charges against Defendant. Furthermore, the Probation Officer has indicated to the Court his disinclination to seek revocation at this juncture. See Hr'g Tr. 11/14/2018 (Doc. 511) at 10:18-25. Regardless, “[t]he court may after considering the factors set forth in section 3553(a)(1)[-(7)] . . . modify, reduce, or enlarge the conditions of supervised release, at any time prior to the expiration or termination of the term of supervised release . . . [or] revoke a term of supervised release[.]” 18 U.S.C. § 3583(c).

         A. Standard of Proof for Revocation of Supervised Release

         “[F]or purposes of a supervised release revocation hearing, the district court need only conclude that a preponderance of the evidence supports revocation.” United States v. Jeremiah, 493 F.3d 1042, 1045 (9th Cir. 2007) (quoting United States v. Lomayaoma, 86 F.3d 142, 147 (9th Cir. 1996); see also 18 U.S.C. § 3583(c)(3). “Ordinarily ‘[t]here is sufficient evidence to support a conviction if, viewing the evidence in the light most favorable to the government, any rational trier of fact could have found the essential elements' of a violation.” Jeremiah, 493 F.3d at 1045 (quoting United States v. Weber, 320 F.3d 1047, 1050 (9th Cir. 2013)) (alterations in original).

         B. Background

         Defendant plead guilty to one count of Conspiracy to Commit Bank Fraud and one count of Conspiracy to Commit Money Laundering. See Judgment (Doc. 385). Defendant was sentenced to two terms of thirty (30) months imprisonment, to run concurrently, and sixty (60) months of supervised release on Count One and thirty-six (36) months of supervised release on Count Twenty. Id. at 1. The restitution was ordered “to be paid jointly and severally with the co-defendants in this case and any related cases.” Id. Defendant was further ordered that he “shall pay the $2, 596, 464.90 restitution and any remaining balance of the $200 special assessment at a rate of not less than $400 or 10% of the household income, whichever is greater, to commence within 30 days of release from imprisonment.” Id. at 3.

         Defendant's restitution obligation began on approximately June 6, 2015. Def.'s Response to Status Rpt. (Doc. 508) at 1. It is undisputed that from October 2014 through August 2018, Defendant was not fulfilling his restitution obligations. See Govt.'s Status Rpt. (Doc. 496), Spaulding Decl. (Exh. “A”) at ¶ 3 & Fruit Debtor's Exam 12/20/2017 (Exh. “C”) at 97:1-14; Def.'s Response (Doc. 508) at 5-6.

         C. Analysis

         The Government has produced voluminous records related to Defendants financial dealings dating back to 2009. Unfortunately, many of the accounts that Defendant had pre-incarceration have since been closed. At this time, Defendant appears to have access to three (3) remaining accounts: 1) a Chase Bank account xxxxxx5710, which is in his parents' names, but for his benefit; 2) a personal Wells Fargo account xxxxxx7397, opened in July 2017; and 3) a Wells Fargo account xxxxxx2524 for Tucson Professional Steam Cleaners, LLC. See Govt.'s Status Rpt. (Doc. 496), Chase Bank 5710 & Wells Fargo 7397 Acct. Stmts. (Exh. “B”) (Doc. 502) at 33-36 & Fruit Debtor's Exam. I 12/20/2017 (Exh. “C”) at 94:18-95:20 & Reges M. Fruit Depo. 3/29/2018 (Exh. “I”) at 8:15-25.

         Defendant manages Tucson Professional Steam Cleaners, LLC (“TPSC”), a business purchased by his parents in June 2015 for his benefit. Govt.'s Status Rpt. (Doc. 496), Fruit Debtor's Exam. I 12/20/2017 (Exh. “C”) at 38:8-20, 89:1-15 & Edwin Fruit Depo. 3/29/2018 (Exh. “J”) at 18:2-20:9 & Bill of Sale 6/15/2015 (Exh. “B”). The sale price was $25, 000.00 plus a $10, 000.00 promissory note. Govt.'s Status Rpt. (Doc. 496), Bill of Sale 6/15/2015 (Exh. “B”) & Edwin Fruit Depo. 3/29/2018 (Exh. “J”) at 18:2- 20:9 & Reges M. Fruit Depo. 3/29/2018 (Exh. “I”) at 25:2-9 & Fruit Debtor's Exam. I 12/20/2017 (Exh. “C”) at 89:1-15. Defendant receives $2, 000.00 per month salary from TPSC. Govt.'s Status Rpt. (Doc. 496), Edwin Fruit Depo. 3/29/2018 (Exh. “J”) at 20:5-6 & Reges M. Fruit Depo. 3/29/2018 (Exh. “I”) at 25:18-23. Defendant additionally receives approximately $1, 000.00 per month salary from A.W. Turf. Govt.'s Status Rpt. (Doc. 496), Fruit Debtor's Exam. II 2/7/2018 (Exh. “C”) at 129:23-130:23. On October 31, 2016, Defendant filed for Chapter 7 Bankruptcy. See In re Fruit, D. Ariz., No. BK-16-12502-BMW. The Government notes that Fruit did not accurately disclose his assets in his bankruptcy petition. See In re Fruit, D. Ariz., No. BK-16-12502- BMW, Ch. 7 Voluntary Pet. for Individuals Filing for Bankr. (Doc. 1). The Government did not seek to have the bankruptcy case reopened or charge Defendant regarding the alleged omissions. Defendant currently lives in an apartment with rent of $935.00/month. Govt.'s Status Rpt. (Doc. 496), Fruit Debtor's Exam. II 2/7/2018 (Exh. “C”) at 129:1-11.

         The Government's Asset Investigator acknowledges that “[i]t is difficult to compute Fruit's available income and expenditures[.]” Govt.'s Status Rpt. (Doc. 496), Spaulding Decl. (Exh. “A”) at ¶ 69. The Court's review of the submitted documents confirms this opinion. The Court is concerned with Defendant's ongoing reckless money management. At the latest status conference, the Government suggested in lieu of revocation, a finding that Tucson Professional Steam Cleaners, LLC belongs to Defendant and he should be ordered to pay $500.00 per month in restitution. Even if, however, the Court attributes $8, 000.00 paid from Defendant's now closed business bank account for Scooters, LLC to TPSC's prior owner, George Prassas, the total cost of the business was $25, 000.00 plus a $10, 000.00 promissory note. The evidence is unclear regarding the source of the $27, 000.00 balance for the business.

         Defendant and his Probation Officer assert that he is able to pay $300.00 per month. In light of the evidence, the Court finds that this is an appropriate adjustment to Defendant's restitution payments. The Court will also recommend additional conditions that are meant to allow the Court, Probation, and the Government to maintain a clearer picture of Defendant's financial situation. See 18 U.S.C. § 3583(d); see also Jeremiah, 493 F.3d at 1046.

         D. ...


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