USA v. Rechnitz - Jona Rechnitz


Southern District of New York, nysd-1:2016-cr-00389-471116

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1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x UNITED STATES OF AMERICA: -v.-: JONA RECHNITZ,: 16 Cr. 389 (AKH): Defendant.: ---------------------------------------------------------------x THE GOVERNMENT'S MEMORANDUM IN SUPPORT OF A DOWNWARD DEPARTURE PURSUANT TO SECTION 5K1.1 OF THE U.S. SENTENCING GUIDELINES AND GENERAL SENTENCING MEMORANDUM GEOFFREY S. BERMAN United States Attorney Southern District of New York Attorney for the United States of America Martin S. Bell Russell Capone Jessica Lonergan Lara Pomerantz Kimberly J. Ravener Assistant United States Attorneys - Of Counsel - 1 I. PRELIMINARY STATEMENT Jona S. Rechnitz is to be sentenced on November 1, 2019. The Government respectfully submits this writing to advise the Court of the pertinent facts concerning the assistance that Rechnitz rendered in the investigation and prosecution of numerous public corruption and fraud defendants. In light of these facts, the Government intends to move at sentencing, pursuant to Section 5K1.1 of the United States Sentencing Guidelines, for the Court to sentence Rechnitz in light of the factors set forth in Section 5K1.1(a)(1)(B)(5) of the Guidelines. When the Government so moves at the sentencing proceeding, it will do so with particular enthusiasm. Since making the determination to cooperate fully with the Government in the spring of 2016, Rechnitz has been, without exaggeration, one of the single most important and prolific white collar cooperating witnesses in the recent history of the Southern District of New York. By every metric by which one measures a cooperating witness, Rechnitz has been both extraordinary and exemplary. His assistance has been of extraordinary value. He has performed and, as set forth below, endured in exemplary fashion as a testifying witness. And he has adhered to his end of an agreement with the Government that requires him to be truthful and law abiding at all times. It is worth, even in this preliminary statement, addressing each of these elements of Rechnitz's cooperation more fully. First, his assistance substantially aided the Government in the investigation and prosecution of numerous, significant public corruption and fraud cases, including the successful prosecutions of the 1 1 former president of New York City's correction officers' union, the co-founder of a New York-based hedge fund, the former Executive Officer of the Chief of Department's Office in the New York City Police Department ("NYPD"), a former regional appointed municipal chaplain and self-styled liaison to the NYPD, a former Harlem restauranteur, and the chief executive of a national sports ticket resale company. His work separately although less directly contributed to a vital investigation and set of prosecutions of corrupt individuals within the NYPD's Gun Licensing Division, a unit charged with approving civilian gun permits that, in the wake of Rechnitz's cooperation and the prosecutions that followed, has undergone sweeping and needed reforms. Second, Rechnitz performed superbly as a witness. He testified at three high- profile trials, during which he endured the active enmity of the gallery, the scrutiny and, often, ridicule of the local media, and harassment from within his community. He was subject to literally weeks of cross-examination by attorneys, including some of the leading lights of the criminal defense bar, whose objective was nothing short of turning him inside out and exposing every suspect pocket of his life to the harshness of daylight. And throughout his cooperation, the information he has provided has been truthful, candid, and corroborated by other evidence, and he has otherwise adhered scrupulously to the terms of the agreement he signed with the Government. He has participated with the Government in over 80 discrete meeting sessions since his cooperation commenced in 2016, the majority of which required him to travel to 2 1 New York City from his home on the West Coast, which he did without reimbursement or complaint. The Government is mindful that Rechnitz was in a position to cooperate regarding a broad range of subject matters in part because, for several years beginning when he was 26 years old in 2008, Rechnitz rode a wave of unbridled ambition and a seemingly limitless sense of entitlement through a series of misdeeds. Rechnitz had been a brazen criminal, and the seriousness of his crimes of conviction cannot, and should not, be minimized. Having been introduced to the world of municipal bribery by Jeremy Reichberg, a Borough Park community figure who had already cultivated extensive corrupt relationships with police officers for his own personal purposes, Rechnitz married his substantial personal means to Reichberg's eye for opportunities to cozy up, through illicit means, to those who occupy New York's corridors of power. The Court, having heard Rechnitz's testimony on this score at the second trial of Norman Seabrook, is familiar with what followed. Rechnitz and Reichberg engaged in a number of behaviors that blew clear past the line into illegality and others that, at best, were severely distasteful and tiptoed right up to that line. Reichberg and Rechnitz bribed high-level members of the NYPD in exchange for police action as opportunities arose, a scheme that came to include the highest ranking uniformed officer in the Department. Rechnitz facilitated a kickback arrangement between Seabrook, the union leader, and Murray Huberfeld, a well-heeled friend who was affiliated with a respected but, unbeknownst to the public, troubled hedge fund. Rechnitz and 3 1 Reichberg made ethically and legally dubious forays into political fundraising, meeting separately with the Westchester County Executive and a representative for the future Mayor of New York City and securing from each a pay-for-play understanding with respect to political donations and future municipal action. Rechnitz violated local election law by using straw donors to raise money in the city election. He lied in the course of soliciting investors to certain of his business ventures, lied in order to qualify for both a gun permit and personal health insurance, and lied in order to gain parking privileges to which he was not entitled. The list of transgressions, as Rechnitz himself has ruefully acknowledged on numerous occasions while meeting with law enforcement, was both stupefying and senseless. But in May 2016, Rechnitz made the decision to accept responsibility for them and cooperate with the investigation. Despite having not been charged with any crimes to that point, Rechnitz initially sat for three full day-long debriefing sessions with the United States Attorney's Office to catalogue his misdeeds. He did so faithfully, accurately, and thoroughly, beginning a series of literally dozens of proffer sessions with the Government. These sessions were the backbone of a process of fruitful and inarguably successful cooperation that lasted more than three years. More than simply fueling a boom of related prosecutions, Rechnitz's cooperation exposed the sordid underbelly of multiple New York City institutions, exposed serious crimes, and held powerful people who fell short of their obligations to the broader public to account. 4 1 Rechnitz's importance to those resulting prosecutions cannot be overstated. The Government would not have been able to prosecute United States v. Norman Seabrook and Murray Huberfeld, 16 Cr. 467 (AKH) without facts Rechnitz provided the Government and his eventual testimony at two separate trials. The Government would not have been able to prosecute United States v. Reichberg, Grant, and Harrington, 16 Cr. 468 (GHW), which concerned police bribery at executive decision-making levels, without Rechnitz's proffer and testimonial contributions to its November 2018 trial. Rechnitz also contributed significantly to the prosecution of United States v. Villanueva et al., 16 Cr. 342 (SHS), involving corruption in the NYPD gun licensing division. Rechnitz also provided information that aided in the resolution of other cases, including that of two corrupt businessmen with whom Rechnitz and others connected to him had collectively invested millions of dollars, and was prepared to testify at a fourth trial. As set forth in greater detail below, Rechnitz also provided facts that could have given rise to other major public corruption prosecutions. To the extent the other cases did not develop, that reflects no fault of Rechnitz in his role as a cooperating witness, but rather challenges inherent in bringing such cases due to the state of the governing law and other issues surrounding the individual cases. In sum, Rechnitz was an indispensable contributor to a number of major prosecutions and investigations brought by the Government. We write to provide the Court with the Government's assessment of the defendant's cooperation, violations of law, and any incidents of misconduct since he 5 1 began his cooperation – of which there were none. We also will convey our assessment of how Rechnitz compares to other cooperators with whom we have worked in terms of the value and extent of his cooperation. On that scale, we rate Rechnitz's cooperation as exceptionally valuable and deserving of great weight in the determination of his sentence. Rechnitz's cooperation, and overall case, defy easy comparison in the recent history of this Office. One useful and important data point that one can apply is that of Todd Howe, whose information led to the prosecution of the Governor of New York's right-hand associate in United States v. Joseph Percoco, 16 Cr. 776 (VEC), and New York State's one-time highest-paid public employee, former SUNY Polytechnic President Alain Kaloyeros, in United States v. Alain Kaloyeros, 16 Cr. 776 (VEC), among others, in separate corruption trials. Like Rechnitz, Howe had a substantial array of criminal baggage. He pled guilty to an Information that charged him with three separate criminal schemes: (i) participation in a bribery and honest services fraud scheme involving Percoco, (ii) participation in a conspiracy, along with Kaloyeros and several real estate executives, to rig government contracts for large New York State economic development projects in Western New York, and (iii) embezzlement from his employer and related tax evasion. Howe also engaged in various smaller-scale frauds and deceptions, from refusing to pay vendors to double-billing clients on travel expenses to depositing an empty envelope into an ATM machine and then falsely claiming to the bank that the envelope had contained a $45,000 check (which conduct had resulted in a previous guilty plea). 6 1 Unlike Rechnitz, Howe testified at only one trial because of a revelation – made during his cross-examination at the Percoco trial – that, while cooperating, he had made suspect challenges to credit card charges in an attempt to obtain reimbursement for a hotel stay and transportation. The Government, in an abundance of caution, sought Howe's remand after this revelation, and he was incarcerated on consent. He remained in jail for the next five months as the Percoco and Kaloyeros trials continued – the latter taking place without Howe's testimony because of the damage stemming from those new facts. Howe was released after five months, and subsequent investigation showed that Howe's credit card activities, while reckless, were not necessarily criminal.1 At Howe's sentencing, the Honorable Valerie E. Caproni, United States District Judge, imposed a sentence of time served (i.e., five months) with five years' probation. Judge Caproni noted the seriousness of Howe's public corruption offenses, and further noted that Howe had "live[d] a life of one fraud after another in the years leading up to the case."2 But she also heavily weighed that Howe had taken responsibility for his crimes, unlike the defendants he testified