Was Felon A Frequent Flyer or Flight Risk?

April 22, 2019

Consider the tragicomedy of Nikesh Patel, who wound up running a company with the somewhat reassuring name of First Farmers Financial LLC. Things didn't end well for Patel or the farmers. We got about $179 million in bad loans. Patel gets indicted. He pleads guilty. All seems to be following the pathway from charge to plea to sentence to incarceration. Then we run into a variation on the whole remorse and acceptance of guilt thing. Three days before his sentencing in federal court, we find Patel at a Florida airport, attempting to board a flight for Ecuador. Should there be any consequence for his attempted flight? He doesn't think so. The courts didn't agree. 

Patel Pleads Guilty

On December 2, 2015, Nikesh Patel, the former Chairman and Chief Executive Officer of First Farmers Financial LLC, was indicted in the United States District Court for the Northern District of Illinois ("NDIL") on five counts of wire fraud. United States of America, Plaintiff v. Nikesh A. Patel, Defendant (Indictment, NDIL, 14-CR-00546) http://brokeandbroker.com/PDF/PatelIndict.pdf As set forth in part in "CEO of Florida Financial Firm Arraigned on Fraud Charges in $179 Million Sham Loan Scheme" DOJ Press Release / December 17, 2015) https://www.justice.gov/usao-ndil/pr/ceo-florida-financial-firm-arraigned-fraud-charges-179-million-sham-loan-scheme:

Nikesh Patel, the chairman and CEO of Orlando-based First Farmers Financial LLC, forged signatures and produced false documents to create the appearance that approximately 26 government-backed loans had been issued to borrowers in Florida and Georgia, according to an indictment returned earlier this month in federal court in Chicago. The sham loans purported to contain principal amounts ranging from $2.5 million to $10 million, the indictment states. Patel sold the fraudulent loans to a Milwaukee investment firm for $179 million, according to the indictment.

On December 6, 2017, Patel pled guilty to all five counts. Initially, sentencing was set for April 6, 2017. 

Fisher Pleads Guilty and Is Sentenced

Also caught up in the First Farmers Financial LLC fraud was the company's President and Chief Operating Officer, Timothy Fisher,, who  pled guilty to one count of money laundering and was sentenced on April 26, 2018, to 10 years in prison. As set forth in part in "President of Florida-Based Financial Firm Sentenced to 10 Years in Prison for Role in $179 Million Sham Loan Scheme" (DOJ Press Release / April 26, 2018):

Fisher admitted in a plea agreement that he created fictitious financial statements that were sent to the Milwaukee company. After receiving money from the Milwaukee firm, Fisher unlawfully engaged in monetary transactions with a portion of the fraudulently obtained funds, including a wire transfer of $450,000 of scheme proceeds.  Fisher caused these proceeds to be transferred from First Farmers' account in Florida to his personal bank account in California. He then transferred these funds to a bank account belonging to a business in Nevada in connection with an investment in that business.

Patel's Attempted Flight to Ecuador

Although Patel was initially scheduled to be sentenced by NDIL on April 6, 2017, he managed to put off that date until January 9, 2018. As explained in part in United States of America, Plaintiff/Appellee, v. Nikesh A. Patel, Defendant/Appellant (Opinion, United States Court of Appeals for the Seventh Circuit, 18-1685) http://brokeandbroker.com/PDF/Patel7Cir.pdf :

From February 2017 through November 2017, Patel filed several motions to continue his sentencing hearing, all of which the court granted. Most of these requests were made by Patel, and granted by the court, because Patel was purportedly helping the Overall Receiver recover additional funds. Patel represented in his motions that he had various opportunities to earn more money for recovery as a consultant on development projects. For example, on November 28, 2017, Patel filed a motion to continue his sentencing because he had a "unique opportunity to earn an additional $1 million for his victims" by assisting with a redevelopment marketing study. According to the motion, this $1 million was "already sitting in Mr. Patel's attorneys' trust fund account," and the Overall Receiver's counsel supported the request for a continuance "given the opportunity Mr. Patel has to assist his victims" in their recovery. The court granted this request as it did the others and finally set Patel's sentencing date for January 9, 2018. 

Three days before that, on January 6, government agents arrested Patel at an airport in Kissimmee, Florida, as he attempted to board a chartered plane to Ecuador. In his possession, Patel had an Indian passport in his name, United States currency, documents relating to his attempt to obtain asylum in Ecuador, financial documents indicating access to accounts holding millions of dollars, and detailed checklists for tasks relating to obtaining asylum in Ecuador and setting up a new life there for himself and his family. 

Patel told the agents at the airport he was traveling to Ecuador because he secured political asylum there; he had also applied for asylum in India but chose to seek it in Ecuador instead because of its extradition laws. The documents in his possession indicated Patel had planned his flight for months: he rented a house in Ecuador, opened bank accounts and transferred funds there, obtained a lawyer to help him through the extradition process, and purchased tickets for his wife and family to travel and meet him in the coming days.   

The government also discovered that while on bond, instead of earning money to pay back his victims through consulting fees and redevelopment projects, Patel and another associate used fictitious identities and entities to defraud an Iowa lender out of millions of dollars. Approximately $2.2 million of the money Patel had ostensibly earned to pay back the Pennant fraud victims was newly‐stolen money. And after his arrest at the Florida airport, while in custody awaiting transfer to Chicago, Patel continued to direct his associate on how to complete this pending fraud.

Pages 5 - 6 of the 7Cir Opinion

The PSR: A "45" Because You Tried to Dance Away and Beat the Rap

Before Patel attempted his flight by flight to Ecuador, the initial Presentence Investigation Report ("PSR") calculated his offense level as a "42," which included a:
  • two-level enhancement for his leadership role in the fraud. and 
  • three-level reduction for his acceptance of responsibility. 
Although Patel had a criminal history Category IV, which fell within 360 months to life imprisonment, the wire fraud counts each had a maximum sentence of 20 years, which reduced the life imprisonment term to 1,200 months. 

So . . . how did Patel's attempted flight alter the PSR? Here's how 7Cir explains it in pertinent part [Ed: footnotes omitted]:

Following the flight attempt, probation adjusted Patel's offense level to 45 by including a two‐level enhancement for obstruction of justice and excluding the three‐level reduction for acceptance of responsibility. The two‐level enhancement for Patel's leadership role in the offense remained. However, the PSR treated the offense level of 45 as an offense level of 43 for calculating the applicable Guidelines range. See U.S.S.G. ch. 5, pt. A (Sentencing Table), app. n.2. Patel remained in criminal history category IV. Based on these calculations, Patel's new Guidelines range was life in prison, which the PSR adjusted to 100 years' imprisonment based on the statutory maximum for wire fraud. The government requested that the district court impose a sentence of 30 years.  

Pages 7 of the 7Cir Opinion

NDIL Can't Imagine

Patel challenged both the PSR's two-level leadership enhancement and the loss of the previously recommended three-level "acceptance of responsibility" reduction. NDIL concluded that Patel was the individual with which the prime victim dealt almost exclusively -- or, as the Court phrased it, he was "in the cat bird's seat of impropriety." As to Patel's other challenge, NDIL concluded that his behavior:

did not indicate he accepted responsibility for his actions: 

[H]e is hatching plans long before February of this year, long before January of this year, to abscond from the jurisdiction and to flee and become a fugitive and to go to, of all places, Ecuador, for political reasons. And what are those reasons? He does not like the United States. Can you imagine that? He is born in this country; educated; in a good family; and, turn around and use his funds, that could be applied to the recovery of people who were victimized by his lies and deceit.

No Excuse -- No Excuse? Ya think??

Apparently not one of those fellows who steps up and take responsibility for his actions, Patel was angered by the disparity between his 30 year sentence versus his co-conspirator Fisher's 10 year sentence:

Patel argued that this three‐to‐one disparity between Patel and Fisher was unjustified, as the two were nearly equally culpable in the First Farmers scheme. Patel further argued that a 30‐year sentence would result in an unwarranted disparity between Patel and other fraudsters involved in schemes much larger than his. Finally, Patel addressed his attempted flight to Ecuador, saying that while it was "uncalled for" and there was "no excuse," it was not a "blank check" to impose an excessive sentence.  

Pages 8 - 9 of the 7Cir Opinion

Nikesh -- you don't mind if I call you by your first name, do you? Anyways, Nikesh, are you kiddin' me? Seriously? You don't think that the courts are going to take a negative view of your flight by flight to Ecuador? Yeah, sure, you're going to get some credit for grudgingly admitting that your attempted departure was "uncalled for." Good for you! On the other hand, like what -- you think that the court is going to simply make you stay an hour after trial for a week? 

In response to Patel's somewhat lame excuses and explanations for why he was caught at the airport, NDIL observe that:

But all of the plans were laid. . . . "What explanation can I give Ecuador as to why I want political asylum," there is thought about that, too. And for any citizen to read that, it is a little insulting that the reason is a distaste for the country. I mean, there is a lot of things wrong with America. No two ways about that. And I am not here to wave the flag over the universe we live in here. But it is still a great country. And to turn your back on it for personal selfish reasons, to denigrate it -- you know, the people are in limbo wanting to become citizens. He was born here. His citizenship was a gift of his birth. And he is so quick to throw it out because he is not going to face the piper. He is not going to stand before me and get sentenced, because he is not going to be here.

Pages 9 - 10 of the 7Cir Opinion

Seeing His 20 and Raising it to 25

Having welcomed Patel back to the U.S. court system with open arms, NDIL sentenced him to 20 years on the first wire fraud count and then added consecutively 5 years each on counts two to five. When his sentenced was pronounced, Patel was slammed with 25 years in prison plus three years of supervised release. Patel appealed the NDIL's sentence to 7Cir. 

On Appeal to 7Cir

In his appeal to 7Cir, Patel raised three arguments that NDIL:
  1. did not appropriately consider the need to avoid unwarranted sentencing disparities between Patel and Fisher, and between Patel and other similarly‐situated defendants; 
  2. failed to mention that it had considered all of the sentencing factors promulgated in 18 U.S.C. § 3553(a); and 
  3. relied on inappropriate considerations at sentencing by focusing on Patel's lack of "patriotism" and by speculating about Patel's psychological state.
Sentencing Disparity

7Cir dismissed Patel's "sentencing disparity" arguments by noting, at the outset, that the lower court pointedly found Patel more culpable than the other cited defendants, and, further, that his proposed examples of mitigation were taken into consideration and apparently weighed when the sentencing was calculated. 

Mechanics Okay

As to Patel's assertion that NDIL was required to somewhat mechanically list each and every Section 3553(a) sentencing factor in its decision, 7Cir saw no reason for a court to articulate each and every factor provided that the court had reviewed same and demonstrated as much on the record -- moreover, 7Cir noted that Patel had effectively waived this argument at sentencing by not expressing any concern, when asked, about whether "anything" should have been addressed more carefully before the imposition of the sentence, and no objection to the consideration of sentencing disparity was raised. 

Make America Great Again: Jail a Felon

Finally, as to Patel's argument about NDIL's inappropriate consideration about his patriotism and mental state, 7Cir seems a tad uneasy about the lower court's musings. But "uneasy" has its limits; and, as set forth in part in the 7Cir Opinion:

[T]he district court never uttered the word "patriotism" or indicated that a lack of it on Patel's part served as the basis for his sentence. Instead, in the court's broader discussion of whether Patel had accepted responsibility for his conduct, the court pointed to his flight attempt as proof that he had not done so.  

The court's comments about Ecuador being the place that Patel sought to flee to -- that it was "a little insulting that the reason" for seeking asylum in Ecuador was "a distaste for" America -- were admittedly off‐topic, but they do not represent the lengthy diatribe on patriotism that Patel describes. In context, the court's comments reflect its consideration of Patel's lack of remorse rather than its personal offense to Patel's choice of Ecuador as a destination. Far from accepting responsibility for his conduct after pleading guilty, Patel meticulously planned to become a fugitive in Ecuador rather than face the consequences of his conduct in the United States. 

As for the court's comments regarding Patel's psychological state and motivations, such as its discussion of Patel refusing "to be called to account," and its reference to Patel as "brazen" in his conduct, these comments relate to various § 3553(a) factors that a court must consider at sentencing. See 18 U.S.C. § 3553(a)(1), (2)(A) (in imposing a sentence, district court shall consider, among other things, "the history and characteristics of the defendant" and the need for the sentence to "promote respect for the law"). Contrary to Patel's representations, there is no indication that the court "did not like" him and sentenced him inappropriately as a result.

Pages 14 - 15 of the 7Cir Opinion

It's Fisher and Foul -- So, the disparity is okay

Finally, Patel raised questions before NDIL about the unjustified and unwarranted sentencing disparity between him and his co-schemer Fisher, two comparably culpable defendants; however, NDIL misinterpreted his arguments as asserting "selective prosecution." In rejecting this final basis for appeal and affirming the lower court, 7Cir states in pertinent part that [Ed: footnotes omitted]:

[A]lthough the government acknowledged that Patel and Fisher were both heavily involved in the First Farmers scheme, the government charged the two very differently. It charged Fisher with one count of money laundering, subjecting him to a maximum punishment of 10 years' imprisonment; it indicted Patel for five counts of wire fraud, subjecting him to a maximum punishment of 100 years. Patel blindly pleaded to his indictment; Fisher pleaded guilty pursuant to a plea agreement. Even though these two individuals were both involved in the same scheme, there was not, as the district court explained, any "basis for [the court] to review the discretion of the U.S. Attorney's Office in viewing the two defendants differently. . . based on their view of who is the prime mover in this very substantial fraud and who was a prime mover, but a little less prime." Cf. United States v. Scott, 631 F.3d 401, 406 (7th Cir. 2011) ("In order to ensure that prosecutorial discretion remains intact and firmly within the province of the Executive, judicial review over prosecutorial discretion is limited."); United States v. Duncan, 479 F.3d 924, 928 (7th Cir. 2007) ("Absent a showing of invidious discrimination, we shall not second guess a prosecutor's decision regarding the charges it chooses to bring.").   

Turning to the merits of the challenge, there is certainly a stark disparity between the sentence of 25 years Patel received and the statutory maximum of 10 years that Fisher faced (a sentence he ultimately received). However, Fisher's much lower sentence "does not negate the reasonableness of the sentence the court imposed on [Patel]." Gill, 889 F.3d at 378 (quoting United States v. Hill, 683 F.3d 867, 871 (7th Cir. 2012)); see also Duncan, 479 F.3d at 929 ("18 U.S.C. § 3553(a)(6) does not instruct district courts to avoid all differences in sentencing, only unwarranted disparities ‘among defendants with similar records who have been found guilty of similar conduct.'" (quoting 18 U.S.C. § 3553(a)(6))). The record reveals several major differences between Patel's and Fisher's conduct that warrants a disparity between their respective sentences. Most notably, as far as the record reflects, Fisher did not engage in an entirely new fraudulent scheme while on bond, attempt to pass off the money received from that fraud as legitimate recovery for Pennant victims, and try to flee the country and seek asylum elsewhere. As Patel noted at sentencing, this conduct is not necessarily a "blank check" to ratchet up Patel's sentence, but it is certainly indicative of differences between his and Fisher's conduct warranting differences in their sentences.

Patel insists, though, that both he and Fisher had the same culpability on the underlying fraud, making this 15‐year disparity inappropriate. But the court adequately explained why despite some "relative parity" between Patel and Fisher, it viewed Patel as more culpable. Pennant dealt almost exclusively with Patel, who told people to "[j]ust deal with me." Patel also completely controlled the bank account to which all the money from Pennant was sent and, as he acknowledges,received a larger share of the stolen funds. Patel alone created the fake USDA loan packages to send to Pennant and forged signatures of USDA employees on them. These differences in Patel's and Fisher's offense conduct, along with the vast difference between their post‐offense behavior, warrants a disparity in their sentences. The district court did not err by taking such differences into account. See Solomon, 892 F.3d at 278.

Pages  17 - 19 of the 7Cir Opinion