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As Tax Shelter Kingpin Daugerdas Wants Out Of Restitution SDNY Judge Pauley Says No

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, Feb 22 – Paul Daugerdas, white collar criminal serving time for fraudulent tax shelters, on April 29 argued for release from his 70 month long imprisonment in the Federal camp at Marion, before U.S. District Court for the Southern District of New York Judge William H. Pauley III. Inner City Press covered it, below. And now this, from Judge Pauley's decision:

"this Court believes that Daugerdas is fit for temporary release from  prison—but only until the COVID-19 pandemic abates."

 Now on February 22, on Daugerdas' motion to be relieved of restitution obligations, Judge Pauley has ruled No: "Defendant Paul M. Daugerdas petitions this Court for a writ of audita querela vacating the forfeiture and restitution orders entered following his convictions for conspiracy to defraud the United States and other crimes related to a fraudulent tax shelter scheme. Specifically, Daugerdas contends that his forfeiture and restitution obligations are unenforceable in view of recent Supreme Court precedent that applies retroactively to this criminal action... The Petition is denied....   Even if this Court ignored Daugerdas’s procedural default, his Honeycutt claim would fail on the merits. “The Supreme Court has not yet decided the application of Honeycutt to other forfeiture statutes, and [some] circuit courts are currently split on the issue.” United States v. Kenner, 443 F. Supp. 3d 354, 367 (E.D.N.Y. 2020) (collecting cases from the Third, Fourth, Fifth, Sixth, Eighth, and Eleventh Circuits). Thus far, the Second Circuit has declined to enter the fray. See United States v. Fiumano, 721 F. App’x 45, 51 n.3 (2d Cir. 2018) (declining to “decide whether Honeycutt’s ruling, made with respect to a forfeiture order under 21 U.S.C. § 853(a)(1), applies equally in all respects to forfeiture orders under other statutes.”). Left to their own devices, a handful of courts in this District have analyzed Honeycutt’s reach, determining that the decision “narrowly addresse[d] the issue of whether joint and several liability is available for forfeiture for co-conspirators in certain drug crimes under 21 U.S.C. § 853(a)(1).” Lasher v. United States, 2018 WL 3979596, at *10 (S.D.N.Y. Aug. 20, 2018); see United States v. McIntosh, 2017 WL 3396429, at *6 (S.D.N.Y. Aug. 8, 2017) (noting that “the Supreme Court meticulously avoided mention of any forfeiture statute apart from Section 853”), appeal docketed, No. 17-2623 (Aug. 24, 2017).  The Government did not rely on § 853(a)(1) when moving for forfeiture against Daugerdas. Rather, the statutory bases for the Forfeiture Order are 18 U.S.C. § 981(a)(1)(C) and 18 U.S.C. § 982(a)(2)(A)."

    Back on April 29, Judge Pauley quickly noted, No positive COVID-19 tests at Marion.

    Defense lawyer Henry Mazurek said, Yeah but...  He said Daugerdas is obese, putting him at risk of Coronavirus.

    Judge Pauley said, I've reviewed Mr. Daugerdas' medical record at the Marion Camp. I did not see any reference in there to heart disease, until I saw your papers. He brought up the release of Dean Skelos ordered for April 30 from Otisville, who'd yet to serve 50% of his sentence, which Inner City Press also covered, here.

   Assistant US Attorney Stanley Okula called Daugerdas the "kingpin of the biggest tax fraud," emphasized that he's served less than 40% of his sentence and has not accepted responsibility. He chided Mazurek for only saying his client must have thought about it during his nights in prison. 

   Judge Pauley asks AUSA Okula why the US Attorney's Office is opposed to him recommending to BOP that they furlough Daugerdas.

    AUSA Okula said, Release from Marion to Chicago is not going to put him in a better sitution.  

  Mazurek cites Judge Ronnie Abrams' decision last week in Park, which Inner City Press also covered, here.

Mazurek says he represented two other inmates at Otisville, from which he noted Dean Skelos was released yesterday.  He said that furlough is for when there are less than 12 months left in a sentence, that he wants compassionate release, under Section 3624.

    Judge Pauley said he was reserving but would decide it quickly. And he did, citing a / the catch - see above. The case is US v. Daugerdas, et al., 18-cr-152 (Pauley).


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