USA v. Haney


Southern District of New York, nysd-1:2019-cr-00541-520490

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9 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------- x: United States of America:: -v-: 19 Cr. 541 (JSR): Hugh Brian Haney,:: Defendant.: ---------------------------------------------------- x SENTENCING MEMORANDUM ON BEHALF OF HUGH BRIAN HANEY DAVID PATTON, ESQ. Federal Defenders of New York, Inc. Attorney for Defendant HUGH BRIAN HANEY 52 Duane Street - 10th Floor New York, New York 10007 Tel.: (212) 417-8737 MARTIN S. COHEN Of Counsel TO: GEOFFREY BERMAN United States Attorney Southern District of New York One. St. Andrew's Plaza New York, New York 10007 Attn: SAMUEL RAYMOND and TARA LAMORTE, ESQS. Assistant United States Attorneys 9 February 5, 2020 By ECF and by hand Honorable Jed S. Rakoff United States District Judge Southern District of New York 500 Pearl Street New York, New York 10007 Re: United States v. Hugh Brian Haney, 19 Cr. 541 (JSR) Dear Judge Rakoff: For seven months in mid-2011 and early-2012, Hugh Brian Haney illegally sold drugs on Silk Road. During that time, Mr. Haney was himself heavily addicted to opioids. In around March 2012, Mr. Haney came to his senses, and stopped both selling and using drugs. From these drug sales, Mr. Haney received approximately 3,893 bitcoins, of which approximately 1,393 remained in the bitcoin wallet that he controlled. See Complaint ¶ 15. At the time that Mr. Haney stopped selling drugs – that is, around March 2012 – these 1,393 bitcoins were worth roughly $7,600.1 In January 2018, Mr. Haney transferred his bitcoins into cash by using Coinbase, a prominent digital currency exchange. When asked about the provenance of the bitcoins in the account, Mr. Haney lied – saying that the bitcoins were all from legitimate sources, as opposed to primarily being the proceeds of narcotics trafficking. At the time of the transfer, Mr. Haney had 1571 bitcoins, which were valued at $19,147,056.98, which reflects an average price of $12,188 per bitcoin, an increase of roughly 2,437 percent from its price in January 2012. The $19 million dollars was never released by Coinbase, has since been seized by the government, and is subject to forfeiture. 1 The average price of bitcoin at the time of the transfers from Silk Road to Mr. Haney's "wallet" was $3.245. At the time of the last transfer, on January 30, 2012, the price was $5.49. See Blockchain BTC Historical Data Lookup, available at I used the $5.49 figure to calculate the value of the 1,393 bitcoins ($7,647). At the time Mr. Haney transferred his bitcoins into cash in 2018, he had 1571 bitcoins. The value of the 1571 bitcoins as of January 30, 2012 was $8,625. 9 Honorable Jed S. Rakoff Page 2 February 5, 2020 Re: United States v. Hugh Brian Haney, 19 Cr. 541 (JSR) Here, Mr. Haney has pleaded guilty to two interrelated crimes involving his attempt to cash in on the proceeds of his narcotics trafficking. For the reasons set forth below, a sentence of 18 months' imprisonment will be sufficient to satisfy all the purposes of sentencing. These reasons include: (1) Mr. Haney's remarkable career as a self-made, successful businessman, who then gave much of his wealth away to charity; (2) his serious addiction to opioids at the time that he was involved in selling drugs; (3) his decision, in around March 2012 to stop using and selling drugs, and the fact that he never did either again; (4) his difficult upbringing as the child of an alcoholic and abusive father; (5) his significant, untreated mental health illnesses; (6) his devotion to his family, who are anxious for his return; (7) his acceptance of responsibility and deep remorse for selling drugs, and for later trying to cash in on the proceeds of those sales; (8) the extraordinarily low risk of recidivism, and (8) the high likelihood that Mr. Haney will continue the positive strides he has made while incarcerated, and will be a wholly positive contributor to his family and community going forward, I. The standard. The overarching command of Section 3553(a) is that sentences should be "sufficient, but not greater than necessary" to achieve the basic goals of retribution, deterrence and rehabilitation. To arrive at such a sentence, district courts are directed to consider: (1) the nature and circumstances of the offense and the history and characteristics of the offender; (2) the need for the sentence imposed to provide just punishment, deterrence, and needed educational and vocational training; (3) the kinds of sentences available; (4) the Guidelines-range and any pertinent policy statements issued by the Sentencing Commission; (5) the need to avoid unwarranted sentence disparities among similarly situated defendants; and (6) the need to provide restitution. See 18 U.S.C. § 3553(a). In every case, the sentencing court "must make an individual assessment based on the facts presented." Gall v. United States, 128 S.Ct. 586, 597 (2007). II. The sentencing factors. A. The nature of the offense and Mr. Haney's background and characteristics strongly support the requested sentence. Hugh Brian Haney, now 61 years old, has done many remarkable things in his life. Until descending into addiction and depression in the mid-2000s, Brian worked non- stop from the time he was a teenager. He has a very sharp, analytical mind, and excelled at sales. As his mother put it, "Brian was amazingly good at making money." See letter of Jane T. Swint, attached as Exhibit A. Brian built a toy company virtually from the ground 9 Honorable Jed S. Rakoff Page 3 February 5, 2020 Re: United States v. Hugh Brian Haney, 19 Cr. 541 (JSR) up. At its height, the Great American Fun Corporation, located in Ohio but international in scope, employed dozens of people, and had annual revenues in the tens of millions of dollars, and profits of several million dollars per year. When Brian stepped away from the business, he invested in real estate, and turned his energies to supporting charitable foundations, donating much of his wealth to fund projects including a prosthetic manufacturing and rehabilitation facility in Sierra Leone; a program that created family- style homes for orphans there; and a social services program for the desperately poor in Chiapas, Mexico. As Ms. Swint writes, Brian was "also amazingly good at giving [money] away."2 Brian Haney's life has been riven by significant mental health issues: Brian has also suffered from chronic substance use, at times on a massive scale. Brian's father was an abusive alcoholic, see PSR ¶ 53-56, and Brian bears deep psychological scars from his childhood, which have remained largely unexplored and untreated. (Addiction disorders also have a significant genetic component. See, L. Bevilacqua and D. Goldman, Genes and Addictions, Clin Pharmocol Ther. 2009 Apr: 85(4): 359-361.3). 2 During a contentious multi-year divorce proceeding, Mr. Haney's wife asserted that Mr. Haney had improperly transferred money to his charitable foundation to shield it from the divorce. Although the Magistrate in the divorce case made no such finding, the government argued in connection with Mr. Haney's sentencing in 2008 that Mrs. Haney's assertion supported a longer sentence, and attached filings in the divorce proceeding as a sentencing exhibit. The Government now provides those same exhibits to the Probation Office, see PSR ¶ 88 n. 3, suggesting that Mr. Haney's claim to have been deeply involved in these charities – which, by the way, he began funding in 2000, years before the divorce – was somehow untrue. As part of the 2008 proceeding, defense counsel provided documents describing Mr. Haney's work, including letters from the directors of the foundations in Sierra Leone and Mexico; a letter from UNICEF, which states, among other things, that "The Matthew 6 Foundation and Brian Haney's successful work in Sierra Leone has been well received and thoroughly documented within that country"; photographs of Mr. Haney in both Sierra Leone and Chiapas, Mexico; and a letter from the accountant of the Matthew 6 Foundation, indicating that it had been funded by gifts of Mr. Haney and his wife of over $20 million. An excerpt of the exhibits filed in 2008 is attached here as Exhibit I; the remaining exhibits are available at United States. v. Haney, 6 Cr. 10230 (NG), Dkt. No. 49 (D. Mass. August 29, 2008); see also letters of Mr. Haney's family, which describe his many charitable works, attached as Exhibits A to G. 3 Available at: 9 Honorable Jed S. Rakoff Page 4 February 5, 2020 Re: United States v. Hugh Brian Haney, 19 Cr. 541 (JSR) In, around 2001, Brian was hit by a car while riding a bike, and shattered his hip. See PSR ¶ 68, letter of Hugh David Haney, attached as Exhibit F. After surgery, he was provided prescription pain relievers, which contained opiates. PSR ¶ 77. He was later prescribed similar pills to deal with chronic back pain resulting from a degenerative disk disease. Id. at 68. After his hip surgery, Brian began abusing opiates. Id. Brian's opioid use increased after his wife began divorce proceedings in 2004. As his mother describes it: "Brian's marriage with Linda was always very volatile, very emotional. When Brian and Linda broke up he literally lost his mind." See Exhibit A; see also letter of Hugh David Haney, Ex. F ("So he stopped going out and started taking pills and never leaving the couch."). Mr. Haney's substance use does not excuse his involvement in the illegal sale of drugs, but it is an important factor in understanding how an extremely successful businessperson, who has done much good in the world, could end up where he did. Brian was first arrested in August 2006 for selling oxycodone, and was sentenced, in September 2008, to a term of 33 months, with the recommendation that he participate in the RDAP program. (The length of the sentence, which was pre-Tapia, appears to be motivated primarily by the need for Mr. Haney to participate in – as Judge Gertner put it – "the only meaningful program that the Bureau of Prisons has to offer." See excerpts of sentencing transcript, United States v. Haney, 6 Cr. 10230 (NG) (D. Mass. Sept. 4, 2008), Dkt. No. 51-2, attached as Ex. H. Brian was released in May 2010, having served roughly two years in prison. When he returned home, he believed that his ability to conduct business – which was the core of his identity – had been destroyed by his drug conviction. Despite successfully completing the RDAP program, he was unable to remain sober, once again fell into a deep depression, and again began abusing opiates on an enormous scale. See PSR ¶ 78. 1. Mr. Haney sells drugs on Silk Road between August 2011 and March 2012. In 2011, Brian was purchasing drugs through an on-line bulletin board entitled "," which he had found on Google. The bulletin board catered to people like Mr. Haney, addicts who were looking for a safe place to buy prescription opioids and other drugs. The folks on the bulletin board began migrating over to Silk Road. Mr. Haney's recollection is that when he started on Silk Road, there was a small community of opiate users, and they would message each other almost every day, looking for places to safely purchase drugs. 9 Honorable Jed S. Rakoff Page 5 February 5, 2020 Re: United States v. Hugh Brian Haney, 19 Cr. 541 (JSR) In his opiate fog, Brian decided that he would go into the business of providing drugs to his fellow addicts. In the moment, he rationalized his decision as one of almost a public service. After he stopped using and selling drugs in March 2012, he realized how absurd these self-justifications were. To use his words, by providing drugs to support his customers' addictions, he helped to "extend their human misery." But during the approximately seven months that Brian was selling drugs, he was in it completely, using all of his business acumen to run a successful, illegal, business.