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Case 1:12-cr-00224-JBW Document 19 Filed 08/13/12 of 40 PageID #: 214

Redacted

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA Criminal Docket No. 12-224 (JBW)

-against-

GARTH RONALD PETERSON,

Defendant.

DEFENDANT GARTH PETERSON'S SENTENCING MEMORANDUM

LANKIER SIFFERT & WOHL LLP 500 Fifth Avenue, 33rd Floor

New York, NY 10110 Tel: (212) 921-8399

Abigail E. Rosen (AR-8748) Frank H. Wohi (FW-1737)

Attorneys for Defendant Garth Peterson


TABLE OF CONTENTS

PreliminaryStatement ...................................................................................................... 1

Statementof Facts ............................................................................................................. 1

1. Offense Conduct .........................................................................................1

2. Cooperation with the Government.............................................................. 5

3. Personal History..........................................................................................7

a. Childhood and Relationship with His Parents................................7

b. Education ........................................................................................ 8

C. Marriage and Family......................................................................8

d. WorkHistoiy ........................................................... ...................... 10

e. Alcoholism and Depression ..........................................................11

Discussion ......................................................................................................................... 12

4. The Section 3553(a) Factors Militate in Favor of a Below Guideline Sentence ...................................................................................13

a. The Nature and Circumstances of the Offense and the Characteristics of the Defendant.......................................................................... 14

i. Peterson's Need to Be in Singapore to Raise His Children.................................................................................................14

ii. Peterson's Need to Provide Support to His Family ...............17

iii. Cooperation.................... ... ....... 18

iv. Alcoholism............................................................................19

v. Cultural Context.....................................................................20

b. Section 3553(a) (2) Factors ........... ............. ............ .......... ........... .. 23

i. Punishment Peterson Has Suffered.........................................23

ii. Low Probability of Recidivism..............................................26

C. The Kinds of Sentences Available................................................. 28


d. The Sentencing Range in Guidelines ............................................30

e. The Need to Avoid Unwarranted Disparities................................32

fRestitution .....................................................................................32

Conclusion ....................................................................................................................... 34

11


TABLE OF AUTHORITIES

Page(s) CASES

Gall v. United States, 552 U.S. 38 (2007) .....................................................................................13

Koon v. United States, 518 U.S. 81 (1996) ...................................................................................16

Rita v. United States, 551 U.S. 338 (2007) (Stevens, J., concurring)............................................13

Simon v. United States, 361 F. Supp. 2d 35, 40 (E.D.N.Y. 2005) ............................................... 27

Smirlock v. United States, No. 04 CV 9670, 2005 WL 975875 (S.D.N.Y. Apr. 25, 2005).......... 31

United States v. Aguirre-Gonzalez, 597 F.3d 46 (1st Cir. 2010)...................................................32

United States v. Aitoro, 446 F.3d 246 (1st Cir. 2006)...................................................................16

United States v. Anderson, 267 F. App'x 847 (11th Cir. 2008) (per curiam) ...............................17

United States v. Aristizabal, No. 07-CR-101-01, 2007 WL4555900 (E.D.N.Y. Dec. 20, 2007) ........................................................................................................18

United States v. Carmona-Rodriguez, No. 04 CR 667, 2005 WL 840464 (S.D.N.Y. Apr. 11, 2005) ........................................................................................................27

United States v. Cull, 446 F. Supp. 2d 961 (E.D. Wis. 2006) .................................................14, 28

United States v. Delgado, 994 F. Supp. 143 (E.D.N.Y. 1998) ......................................................30

United States v. Fernandez, 443 F.3d 19 (2d Cir. 2006) ...............................................................18

United States v. Garcia, 497 F.3d 964 (9th Cir. 2007) ..................................................................19

United States v. Gardellini, 545 F.3d 1089 (D.C. Cir. 2008) .................................................26, 28

United States v, Hernandez, No. 03 CR. 1257, 2005 \VL 1242344 (S.D.N.Y. May 24, 2005).........................................................................................................27

United States v. Huseir, 478 F.3d 318 (6th Cir. 2007)..................................................................16

United States v. Lazeny, 439 F,3d 928 (8th Cir. 2006) ...............................................................19

United States v. Lehner, No. 09-CR-72, 2010 WL 2521438 (E.D,N,Y. June 7, 2010).................20

United States v, Lipman, 133 F.3d 726 (9th Cir. 1998).................................................................22

111


United States v. Mack, No. 08-CR-806, 2010 WL 3282648 (E.D.N.Y. Aug. 18, 2010) ..............24

United States v. Marsh, 820 F. Supp. 2d 320 (E.D.N.Y. 2011).....................................................17

United States v. Matheny, 450 F.3d 633 (6th Cir. 2006)...............................................................20

United States v. Menyweather, 447 F.3d 625 (9th Cir. 2005)................................................. 14, 16

United States v. Munoz-Nava, 524 F.3d 1137 (10th Cir. 2008)....................................................16

United States v. Nellum, No. 2:04-CR-30, 2005 WL 300073 (N.D. Ind. Feb. 3, 2005) ...............27

United States v. Ochoa-Ramos, No. 07-CR-102, 2008 WL 2062341 (E.D. Wis. 2008)...............19

United States v. Peralta-Espinoza, 383 F. Supp. 2d 1107 (E.D. Wis. 2005) .................................23

United States v. Placensio, No. 10-CR-20699, 2011 WL 7807880 (S.D. Fla. June 28, 2011) .........................................................................................................33

United States v. Pugliese, 960 F.2d 913 (10th Cir. 1992) .............................................................30

United States v. Qualls, 373 F. Supp. 2d 873 (E.D. Wis. 2005)....................................................28

United States v. Ranum, 353 F. Supp. 2d 984 (E.D. Wis. 2005).......................................18, 23, 26

United States v. Redemann, 295 F. Supp. 2d 887 (E.D. Wis. 2003) .............................................26

United States v. Roen, 279 F. Supp. 2d 986 (E.D. Wis. 2003)......................................................31

United States v. Rowe, No. 10-CR-607, 2011 WL 6019010 (E.D.N.Y. Nov. 29, 2011) ........27-28

United States. v. Samaras, 390 F.Supp. 2d 805 (E.D. Wis. 2005).................................................26

United States v. Todd, 618 F. Supp. 2d 1349 (M.D. Ala. 2009) ...................................................22

STATUTES

18 U.S.C. § 3553..................................

18 U.S.C. § 3559..................................

18 U.S.C. § 3583............

U.S.S.G. § 2B1.1 ...........

U.S.S.G. § 2171.1 ............

U.S.S.G. § 5D1.1 ...........

passim

29

29

31

31

29

iv


U.S.S.G. § 5E1.2......................... 33

U.S.S.G. § 5111.4 ........................ 19

U.S.S.G. § 51-11.6 ........................ 16

U.S.S.G. § 5K1.1 ........................ 19

U.S.S.G. § 5K2.0 ........................ 19

OTHER AUTHORITIES

Children of Incarcerated Parents Project, Report to the Oregon Legislature on Senate Bill 133(2002)................................................................................................................................15

Doug McVay, Vincent Schiraldi, & Jason Ziedenberg, Justice Policy Institute, Treatment or Incarceration: National and State Findings on the Efficacy of Cost Savings of Drug Treatment Versus Imprisonment (2004)..................................................................................25

Gary Stein, Sentencing of Individuals in FCPA Cases, Business Crimes Bulletin, Vol. 18, No. 5, Jan. 2011 .......................................................................................................................32

Gregory M. Lipper, Foreign Corrupt Practices Act and the Elusive Question of Intent, 47 Am. Crim. L. Rev. 1463 (2010)...............................................................................................21

Kathleen Z. Russell, et al., Children of Incarcerated Parents (2006).............................................15

Nicole Y. Hines, Cultural Due Diligence: The Lost Diligence that Must be Found by U.S. Corporations Conducting M&A Deals in China to Prevent Foreign Corrupt Practices Act Violations, 9 Duq. Bus. L.J. 19 (2007) .............................................................................21

Ross D. Parke & K. Alison Clarke-Stewart, Effects of Parental Incarceration on Young Children(2001)........................................................................................................................15

Sentencing Project, Incarceration and Crime: A Complex Relationship (2005).....................15-16

United States Sentencing Commission, Federal Offenders Sentenced to Supervised Release(2010) .........................................................................................................................29

United States Sentencing Commission, Measuring Recidivism: The Criminal History Computation of the Federal Sentencing Guidelines (2004).....................................................27

v


Preliminary Statement

We respectfully submit this memorandum on behalf of Defendant Garth Peterson seeking

a mitigated sentence pursuant to Section 3553(a) of Title 18 of the United States Code. For the

following reasons, we urge the Court to impose a sentence with no or minimal incarceration and

with any probation or non-incarceration portion of Peterson's sentence to be served in Singapore.

We submit that a sentence well below that recommended by the United States Sentencing

Guidelines is appropriate here for a variety of reasons: (1) because Peterson has shown his

commitment to rehabilitate himself by cooperating with the Government's investigation into his

conduct, by pleading guilty, and by living a law-abiding life for the nearly four years since the

investigation into his conduct began; (2) because any sentence of incarceration, or other sentence

requiring him to be away from Singapore for a significant period of time would be unusually

hard on him and his wife and two young children in Singapore who would be unable to see him

if he were incarcerated in the United States and who rely on him for financial and emotional

support; and (3) because he has already suffered enormously by reason of his offense and the

resulting loss of his career and financial stability, and his painful settlement with the Securities

and Exchange Commission ("SEC"), which included a permanent bar on associating with

financial organizations regulated by the SEC.

Statement of Facts L Offense Conduct

On April 25, 2012, Peterson pled guilty to a conspiracy to evade the internal accounting

controls of a public company before Your Honor. He conspired to mislead his employer,

Morgan Stanley, about the identities of the investors in an investment that Morgan Stanley sold.

Morgan Stanley believed that it was selling a portion of its investment to a Chinese company.


Instead, it sold shares to an entity controlled by Peterson, Peterson's co-conspirator, and a

Chinese official.

Prior to 2002, Peterson was close friends with a man who was the head of Yongye, a

Chinese company. Yongye is a state-owned real estate investment corporation in the Luwan

district of Shanghai. Peterson understood that his friend's position made him a "foreign official"

("the Chinese Official") under the Foreign Corrupt Practices Act of 1977 ("FCPA"). Peterson

and the Chinese Official became close before Peterson started working at Morgan Stanley. They

met through ajob that Peterson had in 1993 and they forged a mentor-mentee relationship. They

often met for dinner after work. From 1995, when Peterson left Shanghai to go to business

school, until 2002, when Peterson started at Morgan Stanley, Peterson occasionally traveled to

Shanghai to visit the Chinese Official without any business purpose. They were so close that

Peterson considered him to be like the father that he never had. After Peterson started working at

Morgan Stanley, they renewed their business relationship.

Also prior to 2002, Peterson's mother asked him to help her invest her retirement funds.

Peterson approached the Chinese Official about ideas for an investment for his mother and the

Chinese Official told Peterson about a real estate investment in Shanghai that was called the

"Site #9" development project. Site #9 was a city block in the Luwan district of Shanghai and

was slated to be developed into a number of different buildings, including a full service

apartment building, similar to the American model of a long stay hotel. Through the Chinese

Official, Peterson invested his mother's retirement money in the Site #9 development project.

In 2002, Peterson took ajob with Morgan Stanley in China. When Peterson joined

Morgan Stanley, he informed them about the investment in Site #9 and Morgan Stanley allowed


him to retain it. From 2002 to 2008, Peterson worked for Morgan Stanley in a group that made

real estate investments in China.

After he joined Morgan Stanley, and was encouraged by his boss to identify investment

opportunities in China, Peterson proposed to Morgan Stanley that it should invest in the Site #9

development project as well. Morgan Stanley decided to do so, and invested $3.4 million for

10% of the Site #9 development project. When Morgan Stanley made that investment, it called

the investment "Project Wally." Morgan Stanley completed its investment in Project Wally in

2003, a year after Peterson had joined the firm. 1

After Morgan Stanley invested in Project Wally, the group of owners, including Peterson

and Morgan Stanley, began selling off assets developed on Site #9 and returning capital to the

investors. Ultimately, only one building was left - the full service apartment building. The

owners decided to sell it. An Australian bank, Macquarie, entered into negotiations to buy the

building but those negotiations failed. Morgan Stanley then decided to purchase the serviced

apartment building from the consortium of owners, becoming a 100% owner of the building

instead of a 10% owner. They called that investment - buying the full service apartment

building from Project Wally "Project Cavity."

Morgan Stanley's desire to become the 100% owner of Project Cavity would force

Peterson to sell his mother's holding in the real estate investment, since the investment in Site #9

was an owner of the serviced apartment building. Peterson did not want to do so and asked his

boss at Morgan Stanley, Zain Fancy, if he could remain an investor in the building. Fancy told

him that he should not even raise the idea to others at Morgan Stanley because it would not be

Morgan Stanley purchased the investment for the same per share price as the initial investors, even though it invested a year later.


well received, and Peterson dropped it. Morgan Stanley bought Project Cavity in 2004. The

Chinese Official helped ensure that Morgan Stanley was able to buy the building.

Peterson was frustrated that he had been forced to liquidate the investment he had made

for his mother, so he decided to seek a self-help remedy: to secretly buy back into Project Cavity

at the same price at which he was forced to sell. To do this, two years later, in early 2006,

Peterson encouraged Morgan Stanley to sell a 12% interest in Project Cavity to an entity called

Asiasphere at the price Morgan Stanley had paid for the investment in 2004. Peterson, along

with another person, misrepresented to others at Morgan Stanley that Asiasphere was owned by

Yongye, the Luwan district real estate investment company. Peterson convinced Morgan Stanley

to sell a piece of the investment to "Yongye" because of the prior assistance that Morgan Stanley

had received from the Chinese Official. Morgan Stanley likely also perceived a benefit to selling

a portion of the investment to a local investor fluent in Chinese. However, Asiasphere was

actually controlled by Peterson, the Chinese Official, and another person. Peterson included the

Chinese Official in Asiasphere in order to pay him back for favors that the Chinese Official had

extended to Peterson. Unlike the traditional FCPA case, Peterson had a close relationship with

the Chinese Official. He did not invest with the Chinese Official in order to obtain a specific

business outcome, but out of a misplaced desire to help the Chinese official for all he had done

for Peterson and Morgan Stanley over the years. Peterson's criminal misconduct arose from an

ill-conceived and misplaced attempt to protect his mother's investment. Peterson knew that by

misleading Morgan Stanley into believing that Asiasphere was owned by Yongye, he was

intentionally circumventing Morgan Stanley's internal controls, which were designed to prevent

the transfer of items of value to foreign officials and to Morgan Stanley employees. In March

rd


2006, the sale to Asiasphere was consummated and the Chinese Official, his co-conspirator, and

Peterson became investors in Project Cavity.

Peterson knows that what he did was wrong. He contacted the Government through

counsel shortly after learning of its investigation and ultimately, after cooperating with the both

the SEC and the DOJ for over two years, pled guilty before Your Honor on April 25, 2012, See

Exh. A (Letter from Garth Peterson) ("It has been years since I made the mistakes that landed me

in this place and I continue to deeply regret my actions.").

2. CoOperation with the Government

Peterson sought to come clean and cooperate with the Government as soon as he knew

that there was an investigation into his conduct by the United States. Though he knew what he

did was wrong, it did not initially occur to him that the United States would be interested in his

conduct because he lived and worked abroad. Significantly, in August 2009, before the

Government had made any attempt to contact him, Peterson contacted the United States

Attorney's Office, through counsel, while he was living abroad, to offer his cooperation.

Peterson's unusual decision to approach the Government in this way showed a sincere desire to

assist with the Government's investigation.

After reaching out to the Government, Peterson left his home and family in Singapore for

an extended period of time, at considerable cost to himself, in order to be interviewed by the

Government on four occasions between November 2009 and June 2010. During most of this

period, he remained in the United States, away from his wife and children, to be available for the

Government. This was a difficult period for him and his family. See Exh, B (Letter from Renee

Sanabria, Peterson's sister) ("I have participated in his suffering over the past three and a half

years and carry the intense sorrow of impeding future consequences."); Exh. C (Letter from Aw

Sok-Ling, Peterson's wife)


Indeed, he has few contacts in the United

States, having spent most of his life abroad, and had no reason to be in the United States other

than to help the Government. He appeared at the Government's request, and answered all

questions posed to him, for a total of approximately 28 hours. Although his memory was

hindered by his lack of access to the enormous record of emails and other documents, as well as

by his history of alcohol abuse, he was sincere in his desire to help the Government and we

believe that his responses were of value to the Government.

Further, an important part of Peterson's effort to assist the Government was his provision

of documents. He provided his own financial records, some of which he had not kept, and which

required significant effort on his part to obtain and compile, many of which would have been

difficult or impossible for the Government to obtain because they were located in foreign

jurisdictions. He provided his tax returns since 2006. He also answered many rounds of

questions from the SEC to help its attorneys analyze and understand the documents he provided.

Providing this assistance has been both time-consuming and expensive for Peterson.

He has assisted the Government's investigation in a number of other ways. He signed

two tolling agreements with the Government and another with the SEC to allow them to continue

their investigations without risking the statute of limitations expiring. He has indicated that he is

willing to testify for the Government, if asked. Finally, Peterson is voluntarily surrendering

himself from a foreign country, avoiding the need for the Government to extradite him.

The Government has recognized the value of the cooperation that Peterson has provided

to the SEC. In lieu of criminal forfeiture, Peterson's plea agreement calls for him to cooperate

with the SEC's efforts to forfeit assets that were proceeds from Peterson's offense. Peterson has

6


settled with the SEC, paid $241,589 in cash, and convinced his mother to forfeit her interest in

the Cavity investment. This onerous settlement, calculated on the basis of Peterson's ability to

pay, has left him and his family with a very uncertain future. He is cooperating with the receiver

who was appointed to transfer his interest in Cavity to the SEC.

3. Personal History

a. Childhood and Relationship with His Parents

Peterson, age 43, was born in Downey, California. He was raised with his older sister

Renee by his mother, Dianne, and Dorothy, a woman he considered to be akin to an adopted

grandmother, after his parents divorced. See Exh. A (Letter from Garth Peterson); Exh. B

(Letter from Renee Sanabria, Peterson's sister) ("Growing up, the dearest person to Garth and I

was our adopted grandmother, Dorothy."); Exh. C (Letter from Aw Sok-Ling, Peterson's wife)

("Garth was very close to Dorothy, and they shared a very special relationship. . .

Peterson's father was an alcoholic. See Exh. B (Letter from Renee Sanabria, Peterson's

sister) ("[O]ur father suffered from chronic alcoholism . . . ."). Though he did not know it when

he was young, his father was also mentally ill. See Exh. B (Letter from Renee Sanabria,

Peterson's sister) ("As adults, we learned that our father suffered from . . . schizophrenia.")

In 1975, when Peterson was six, his mother moved to Singapore to get away from

Peterson's father. See Exh. B (Letter from Renee Sanabria) ("The ongoing tension and legal

battle over custody rights and alimony payments resulted in bitter hatred between my parents.

Eventually my mother accepted a teaching job outside the United States and we moved to

Singapore."). In part to avoid Peterson's father, Dianne moved with Peterson and Renee at least

nine times in ten years. Id. ("My mother was terrorized and would make us move every 9-12

2 The details of Peterson's personal history are set forth in Exhs. A (Letter from Garth Peterson) and B (Letter from Renee Sanabria, Peterson's sister).

7


months to try to stay ahead of our father."). Despite Dianne's efforts to stay hidden, in 1978,

when Peterson was nine, Peterson's father kidnapped Dorothy, Peterson, and Renee. Id. ("A few

years [after they moved to Singapore], my father retaliated for that move by kidnapping us.

"). They were rescued by the police in a Hong Kong hotel. Id. ("[M]y mother [contacted]

Interpol and drain[ed] her already limited finances to recover us.")

Peterson's family was not particularly wealthy while he was growing up. Dianne worked

a second job and rented rooms in their house to boarders. (stating that "[m]y mother worked

constantly, taking extra tutoring and teaching responsibilities, and renting out rooms in our home

to boarders" to provide for the family). Through his Singaporean friends, he learned Asian

customs and culture as well as several Asian languages. Peterson was a well-behaved child. See

Exh. D (Letter from Dianne Peterson, Peterson's mother) (providing that Peterson was the

"model son" who "did errands and routine chores" and "stayed home on Friday nights to keep

Dorothy or me company").

Peterson reconnected with his father, briefly and unsuccessfully, in 1988. His father died

at age 59 in 1999. Id.

b. Education

Peterson returned to the United States to attend Cornell University and graduated cum

laude in 1992 with a Bachelor of Arts in Economics and Asian Studies. Peterson graduated from

the University of Chicago business school in 1998.

c. Marriage and Family

Peterson and his wife, Aw Sok-Ling married in 1997. They have two children: 0. 9,

and_____ 4.


____ was born just before Morgan Stanley informed Peterson that he was under

investigation. Peterson spent significant time away from M when he was young to cooperate

with the Government in the United States.

Peterson has spent the last several years bonding with his children. His wife considers

this the only "blessing to be counted out of this ordeal." Id. (stating that their daughter "is able

to recite the names of Roman emperors in chronological order thanks to her dad, who spends

time every night with her"). His friends Eunice Ew and Agabus Lee wrote about how Peterson is

"deeply involved in his children's education," teaching his three-year-old son to "read and do

simple math." They also noted that a prison sentence would be a "very significant loss" to his

wife and children. See Exh. E. His niece, Elsa Sanabria, wrote about how Peterson tries to make

his daughter's homework into a fun game and cooks for the family. Exh. F.

Peterson is intimately involved in the lives of his extended family. His nephew, Josh

Sanabria, wrote to the Court about how his life has been "defined by Garth," with Peterson

inspiring him to study abroad and get involved in a community service project in Peru. Peterson

pushed Josh to "study hard and succeed in school" and paid for Josh to study Spanish in Spain

and Mexico and helped to pay for his college tuition. Exh. G. Elsa, his niece, described how she

has seen him "act with kindness and generosity" and how he is "very loved" by his family. Exh.

F. She described how Peterson "paid for [Dorothy's] nursing home for two years so that she

could be near to [Elsa's] family" in California, where they lived at the time. Id. His sister

describes how this assistance "relieved us of the burden of relying on public assistance and

Medicaid." Exh. B. His mother wrote about how he provided care to both her and his

grandfather in 2007 and "made sure [they] were given the best care possible." Exh, D.


Peterson has also been generous with others. As Bryan Southergill wrote, Peterson

helped two friends in China apply to study in the United States and paid their tuition and living

expenses. See Exh. H.

d. Work History

Peterson has worked nearly continuously since graduating from college. See Exh. A

(Letter from Garth Peterson).

In 2002, Peterson joined Morgan Stanley's Hong Kong office as an Associate. Peterson

was instrumental in helping Morgan Stanley grow the Hong Kong office, and, later, in 2006, in

opening the Shanghai office for Morgan Stanley. According to his colleague Henry Young,

"Garth built the Morgan Stanley Shanghai office from scratch and employed over 70 people

within three years, managing 30 real estate projects and USD $2.5 billion of total equity." Exh.

I. From his first year with Morgan Stanley, Peterson brought deals to Morgan Stanley. See Exh.

J (Letter from Jonathan Davis, Peterson's colleague at Morgan Stanley) (explaining that from

2005 to 2008 "[t]he overwhelming majority of [Chinese real estate investments by Morgan

Stanley] were personally sourced and actively guided to closing by Mr. Peterson"). Peterson's

hard work bringing investment banking business to the China office of Morgan Stanley

contributed to the firm receiving the top award by Euromoney at Euromoney's 2006 Real Estate

Awards for "Investment Management in China." 3 Bryan Southergill, who worked at Morgan

Stanley with Peterson, explained that Peterson "helped put Morgan Stanley on the map in terms

of the property developer IPO space." Exh. H. Southergill listed a number of companies that

Peterson was able to persuade to do initial public offerings with Morgan Stanley. Id. Based on

his successes, he was promoted to Vice President after two years. He was promoted the next

Reference to this award is made on Morgan Stanley's website at: http://www.morganstanley.comlaboutlawards/articies/5656 1 ee6-ef4 i-il dd-a44f-ebeaI225e6f5 html.

10


year to Executive Director. Two years later, he was promoted to Managing Director. Overall, he

brought in about nineteen deals during his six years at Morgan Stanley. Many of these deals

have not been sold so the profits to Morgan Stanley cannot be accurately estimated at this point.

The amount of capital that Morgan Stanley put into Peterson-managed deals over $2 billion

speaks to the company's reliance on him as a source for business. Exh. I (Letter from Henry

Young). Bryan Southergill, who worked at Morgan Stanley with Peterson, wrote that "Peterson

introduced good partners and investment opportunities to Morgan Stanley and made many

successful investments that made Morgan Stanley arid Morgan Stanley's real estate funds

investors an incredible amount of money." Exh. H. Southergill describes Peterson's

contribution to the Morgan Stanley business as helping "build Morgan Stanley's real estate

business in China from nothing to a huge success." Id.; see also Exh. K (Letter from John C.

Portman III) ("Garth had significant achievements as a real estate investor and banker in China.

It is reasonably common knowledge in the China real estate market that in the space of just a few

years Peterson was instrumental in evolving Morgan Stanley from somewhat of a non-player in

this market into the leading banker for Chinese real estate firms, as well as the leading foreign

real estate investor in China.")

e. Alcoholism and Depression

Peterson is genetically predisposed to alcoholism. Although he had not previously

exhibited signs of alcoholism, when he joined Morgan Stanley, he started to abuse alcohol,

drinking with his team and when entertaining clients. See Exh. C (Letter from Aw Sok-Ling)

("It was during our move to Shanghai in 2006 with our daughter Ning, that I beg[a]n to see

drastic changes in Garth, . Garth's drinking slowly became a huge problem. . .

When he was fired by Morgan Stanley in 2008, his drinking got worse. He has been

severely depressed because of his termination and the instant investigation. He was treated for

11


alcohol abuse at an in-patient substance abuse treatment program in 2009 in Long Island. Later

in 2009, he was treated for alcoholism again in a Massachusetts hospital and attended several

mental health counseling sessions in early 2010.

More recently, consistent with his effort to take responsibility for his actions and

rehabilitate himself, he has made significant strides to stop drinking. See Exh. C (Letter from

Aw Sok-Ling) ("In the last year and a half, Garth has made significant progress. We have come

to know God, and attend church regularly and that has helped us cope."). Of course, alcoholism

is a lifelong battle, and he continues to need support to stay sober

Discussion

As discussed more below, there are a number of factors that we believe support our

request for a probationary sentence for Peterson.

Incarceration in the United States will be especially hard on Peterson and his family.

Peterson's family lives in Singapore, and his young children will be separated from him during

any period of incarceration. They simply do not have the financial means to come to the United

States to visit him. It is virtually certain that he will not see his wife or children during any

period of incarceration. Of course, any period that Peterson is out of the work force will

exacerbate that already devastating effect of the financial circumstances and uncertain future he

and his family now face.

Further, Peterson's acceptance of responsibility for his offense and his expressions of

remorse are well beyond the normal. He came from overseas to cooperate with the

Government's investigation and ultimately waived his trial rights to plead guilty. He has lived a

law-abiding life since the investigation into his conduct began. Peterson is over forty and

unlikely to reoffend. Peterson is a recovering alcoholic and has made significant steps towards

12


rehabilitation. Peterson's actions are mitigated when viewed in the proper cultural context, as

discussed below.

Moreover, Peterson has already suffered severe punishment for his offense in a number

of ways, including having his financial security eviscerated, being barred from work in his

profession, becoming nearly unemployable, and spending the last three-plus years waiting for

resolution of this matter. Based on the Section 3553(a) factors, 4 we respectfully submit that a

sentence without incarceration is most appropriate and would best serve the interests of justice.

4. The Section 3553(a) Factors Militate in Favor of a Below Guideline Sentence

As indicated in Peterson's plea agreement, the Government has agreed that the guidelines

range that applies to Peterson's conduct is 51 to 63 months, and that the maximum for this

offense is 60 months, effectively making the sentencing range 51 to 60 months. The guideline

range is advisory, and the Court is also obligated to consider the factors set forth in 18 U.S.C. §

3553(a) in order to craft an appropriate sentence. See Gall v. United States, 552 U.S. 38, 49-50

(2007) (explaining that the court must "consider all of the § 3553(a) factors to determine whether

they support the sentence requested by a party" and the court "may not presume that the

Guidelines range is reasonable"); Rita v. United States, 551 U.S. 338, 381 (2007) (Stevens, J.,

concurring) (noting that post-Booker "sentencing courts [are] obligated to consider the various

factors delineated in 18 U.S.C. § 3553(a) . including the now-advisory Guidelines range')

Section 3 553(a) requires that the Court impose a sentence "sufficient, but not greater than

These factors are: "(1) the nature and circumstances of the offense and the history and characteristics of the defendant; (2) the need for the sentence imposed— (A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense; (B) to afford adequate deterrence to criminal conduct; (C) to protect the public from further crimes of the defendant; and (D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner; (3) the kinds of sentences available; (4) the kinds of sentence and the sentencing range established for— (A) the applicable category of offense committed by the applicable category of defendant as set forth in the [Sentencing Guidelines] . . . ; (5) any pertinent policy statement [in the Sentencing Guidelines]; (6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and (7) the need to provide restitution to any victims of the offense." 18 U.S.C. § 3553(a).

13


necessary," to comply with the purposes set forth in that section. See United States v. Cull, 446

F. Supp. 2d 961, 963 (E.D. Wis. 2006) (describing the "sufficient, but not greater than

necessary" clause in § 3553(a) as the "parsimony provision, which requires the court to impose

the least severe sentence necessary to satisfy the four purposes of sentencing punishment,

deterrence, protection of the public and rehabilitation"); see also United States v. Menyweather,

447 F.3d 625 (9th Cir. 2005) (upholding an eight-level departure for embezzlement of $500,000

in light of broader, post-Booker discretion to weigh a multitude of factors previously deemed

"not ordinarily relevant")

a. The Nature and Circumstances of the Offense and the Characteristics of the Defendant

Section 3553(a)(1) instructs courts to consider the "nature and circumstances of the

offense and the history and characteristics of the defendant" when crafting a sentence. We ask

the Court to consider the below factors under Section 3553(a)(1).

i. Peterson's Need to Be in Singapore to Raise His Children

Peterson has a close relationship with his two children. He cares for them, and spends

time teaching them everyday. The longer he is imprisoned, the more he will miss of their early

development. Peterson's mother wrote, "I cannot imagine the trauma these children would

endure if he were absent from their lives for an extended period." Exh. D. Peterson did not have

a father figure as a child, and suffered for it. His children should not have to suffer the same

consequence. Peterson's imprisonment will be a particular burden on his relationship with his

children since they live abroad. They likely will not be able to afford to visit him even once

while he is in jail, given the distance and his family's lack of income while he is in jail. It will be

difficult for them to even talk by phone, since Singapore's time zone is twelve hours different

14


from the East Coast of the United States. Also, prisoners can only make collect phone calls, and

collect phone calls to Singapore will be prohibitively expensive.

The brunt of this burden will be born by Peterson's innocent children. Children of

incarcerated parents suffer emotional and psychological effects during the period of

incarceration, See Children of Incarcerated Parents Project, Report to the Oregon Legislature on

Senate Bill 133, at 1 (2002) .

5 Indeed, children who are able to visit their parents in prison during

the time of imprisomrnent fare better than those who cannot. See Kathleen Z. Russell, et al.,

Children of Incarcerated Parents 11 (2006).6 Unfortunately, that option is not realistically

available to Peterson's children.

Children typically exhibit behavioral problems while a parent is incarcerated. See Ross

D. Parke & K. Alison Clarke-Stewart, Effects of Parental Incarceration on Young Children

(2001) ("[O]ver 50% of the children of incarcerated parents had school problems, such as poor

grades or instances of aggression. . .

See Exh. C. Parke and

Clarke-Stewart also note that an "important determinant of children's adjustment to their parent

being in prison is regular contact with the incarcerated parent." Ross D. Parke & K. Alison

Clarke-Stewart, Effects of Parental Incarceration on Young Children. Parke and Clarke-Stewart

suggest house arrest as a possible solution to the harm associated with incarcerated parents.

The impact of parental incarceration is long-term and severe children whose parents

are incarcerated are seven times more likely to go to prison themselves. Russell, et al., Children

of Incarcerated Parents, at 12; see also The Sentencing Project, incarceration and Crime: A

This publication is available at: ht://wwwore2ongov/DOC/PUBAFF/d df/legLe2ort bill I 31pdf?ga=t. This publication is available at: //www+dshs.wa.gov/idf'main/Iegrep/LegO7O6/IncarParO6O6.pdf.

' This publication is available at: http://aspe.hhs.govihsp/prison2horneO2/parke-stewart.htm.

15


Complex Relationship 7 (2005) (noting that the "persistent removal of persons from the

community to prison.. . has a destabilizing effect that has been demonstrated to fray family and

community bonds" particularly when "prisoners are ... incarcerated in facilities hundreds of

miles from their homes"). 8

Although family circumstances are a discouraged factor under the sentencing guidelines, 9

courts may consider them post-Booker. See United States v. Aitoro, 446 F.3d 246, 255 n.9 (1st

Cir. 2006); Menyweather, 447 F.3d at 634 ("[A]fter Booker, courts can justify consideration of

family responsibilities, an aspect of the defendant's history and characteristics, 18 U.S.C. §

3553(a)(1). . . . District courts now have the discretion to weigh a multitude of mitigating and

aggravating factors that existed at the time of mandatory Guidelines sentencing, but were

deemed not ordinarily relevant, such as. . . family ties and responsibilities." (ellipses, footnotes,

and quotation marks omitted)). Such consideration is called for here because Peterson's family

circumstances are extraordinary: a near total absence of communication will occur between him

and his young children.

Post-Booker, courts regularly consider defendants' family circumstances when setting an

appropriate sentence under Section 3553(a). See, e.g., United States v. Munoz-Nava, 524 F.3d

11 37, 1141 (10th Cir. 2008) (affirming below-guidelines sentence of a year and a day which was

based in part on the fact that the defendant raised his eight-year-old son as a single father and

cared for his elderly parents who had serious medical problems); United States v. Husein, 478

F.3d 318, 330 (6th Or. 2007) (affirming a one-day sentence, below the 37- to 46-month

guidelines range, which was based in part on the defendant's need to care for her ailing father);

8 This publication is available at: http://www.sentencingproject.org/doc.ipublications/inc iandc eompex.pdf. See U.S.S.G. § 5H1 .6 ("[Fjamily ties and responsibilities are not ordinarily relevant in determining whether a

departure may be warranted."); Koon v. United States, 518 U.S. 81,95 (1996) ("Discouraged factors... are those not ordinarily relevant to the determination of whether a sentence should be outside the applicable guideline range." (quotation marks omitted)).

16


United States v. Anderson, 267 F. App'x 847, 850 (11th Cir. 2008) (per curiam) (unpublished

opinion) (affirming sentence of home confinement and probation, below the guidelines range of

18 to 24 months, for an over-SO-year-old defendant who supported his college-aged children,

who lost his high-paying job, and also relocated to find employment). This Court has also taken

a defendant's family circumstances into account when sentencing under Section 3553(a). See

United States v. Marsh, 820 F. Supp. 2d 320, 350-5 1 (E.D.N.Y. 2011) (sentencing defendant to a

non-guidelines sentence of three months imprisonment to avoid having a young son have two

incarcerated parents).

We ask that the Court consider this factor when sentencing Peterson and when setting the

terms of any supervised release term that the Court deems appropriate. We discuss the

supervised release issue further below.

ii. Peterson's Need to Provide Sutmort to His Famil

Prior to the termination of his employment at Morgan Stanley, Peterson supported his

wife and children, his mother and stepfather, and provided some support to his sister. Although

Peterson has been out of work for several years, his family has continued to pay living expenses

from the money that he saved while he was working. Those savings, particularly after his

settlement with the SEC, are almost gone. At the same time, his wife has not worked outside the

home, and is not well equipped to start working now, with two small children at home.

Peterson's absence from the workforce for these last few years has been a significant strain on

his family, and the longer that he is imprisoned, the harder the burden will be.

Of course, Peterson cannot return to the workforce while he is incarcerated or detained in

the United States. As Jeremy Tarrier wrote in his letter to the Court, Peterson has been working

on a plan for providing for his family as soon as he has completed whatever sentence the Court

issues to him. Tarrier explained that Peterson has expressed a vision of opening a series of

17


restaurants in Singapore with Southern Californian cuisine. See Exh. L (Letter from Jeremy

Tarrier, Tarrier wrote that he is

considering a "joint venture" with Peterson to fulfill Peterson's vision. Id.

This Court regularly recognizes the importance of allowing defendants to provide for

their families when crafting sentences. See, e.g., United States v. Aristizabal, No. 07-CR-101-

01, 2007 WL 4555900, at *2 (E.D.N.Y. Dec. 20, 2007) (imposing a "below-guidelines sentence.

because the defendant has a good relationship with his wife and children and he has been

trying to support them"). Other courts have considered this same factor. See, United States

v. Ranum, 353 F. Supp. 2d 984, 990-91 (E.D. Wis. 2005) (considering that "defendant's absence

would have a profoundly adverse impact on both his children and his parents" when sentencing

the defendant to a below guidelines sentence).

iii. Cooperation

Peterson made substantial efforts to assist the Government in its investigation.

Specifically, Peterson, a target in the investigation, reached out to the Government to offer his

cooperation, traveled to the United States from his home to Singapore to participate in four

proffer sessions, provided documents to the Government, including documents that he obtained

at the Government's request from third-parties, and answered many rounds of questions about

those documents from the SEC, signed tolling agreements with both the Government and SEC,

and voluntarily surrendered himself from abroad.

His cooperation with the investigation into his conduct is appropriate for the Court to

consider during sentencing. Cooperation, even in the absence of a motion made by the

Government pursuant to Section 5K of the Sentencing Guidelines, is a beneficial part of a

defendant's history and character supporting a non-guideline sentence. See United States v.

Fernandez, 443 F.3d 19, 33 (2d Cir. 2006) ("We agree that in formulating a reasonable sentence


a sentencing judge.. . should take under advisement. . . the contention that a defendant made

efforts to cooperate, even if those efforts did not yield a Government motion for a downward

departure pursuant to U.S.S.G. § 5K1.1 .. . ."); United States v. Lazenby, 439 F.3d 928, 933-34

(8th Cir. 2006) (remanding for resentencing where the district court, among other things, failed

to consider the defendant's cooperation with the government in the absence of a Section 5K

motion); United States v. Ochoa-Ramos, No. 07-CR-102, 2008 WL 2062341, at *3 (E.D. Wis.

2008) (considering defendant's cooperation with the government as evidence of defendant's

positive character and acceptance of responsibility under Section 3553(a) beyond [an acceptance

of responsibility] reduction under Section 3E1.1, in the absence of a Section 5K motion from the

prosecution).

iv. Alcoholism

Peterson struggled with alcoholism during the time that he committed the offense. While

he was in the United States cooperating with the Government, he sought treatment for his alcohol

dependence. Since returning to Singapore, he no longer abuses alcohol. He has turned his life

around in order to maximize his time with his young children.

Although alcohol dependence is a discouraged factor for a downward departure under the

Sentencing Guidelines, U.S.S.G. § 5H1 .4, § 5K2.0(d)(1), the Court has an obligation to consider

"the nature and circumstances of the offense and the history and characteristics of defendant"

under Section 3553(a), a requirement which is in tension with the Guidelines prohibition on

considering alcohol dependence. This tension was recognized in United States v. Garcia, 497

F.3d 964, 971 (9th Cir, 2007). In Garcia, the Court of Appeals for the Ninth Circuit explained

that "[j]ust because a consideration was improper under the mandatory Guidelines regime does

not mean that it is necessarily improper under the advisory Guidelines regime." The Court

concluded that "district courts are not prohibited in all circumstances from considering a


defendant's drug addiction in choosing a reasonable sentence." Id.; see also United States v.

Matheny, 450 F.3d 633, 641 (6th Cir. 2006) (approving tacitly the sentencing court's statement

"that it considered, pursuant to § 3553(a)(1), the fact that Matheny had his drug addiction since

childhood").

This Court has recognized that a defendant who has struggled with alcohol dependence

and who rehabilitates himself is worthy of sentencing consideration. See, e.g., United States v.

Lehner, No. 09-CR-72, 2010 WL 2521438, at *2 (E.D.N.Y. June 7, 2010) (sentencing defendant

to a below-guidelines sentence and acknowledging defendant's "apparent post-arrest

rehabilitation" from alcohol abuse). We ask that the Court consider Peterson's efforts to

rehabilitate himself in sentencing.

V. Cultural Context

Peterson committed an FCPA offense without stepping foot in the United States while

working for a Chinese subsidiary of a United States company. Peterson's tenuous connection

with the United States, despite being a United States citizen, makes this case very unusual and

makes Chinese cultural considerations relevant.

Peterson admitted at his plea hearing that he helped the Chinese Official to invest

personally in a Morgan Stanley investment at a beneficial price and that by misleading Morgan

Stanley about this fact with another person, he conspired to violate the FCPA. The Chinese

Official was a close friend of Peterson's —in many ways a father figure to him and Peterson

helped him in order to repay the help that the Chinese Official had given him through his career.

This type of favor is called 'guanxi" in China, a term that describes the exchange of gifts or

favors in a professional setting. Guanxi is the traditional way that business relationships are

20


developed in China. See Gregory M. Lipper, Foreign Copt Practices Act and the Elusive

Question of Intent, 47 Am. Crim. L. Rev. 1463, 1485 (2010). The article explains that

different cultures have different understandings of what constitutes a gift as opposed to a corrupting bribe. To take one example, in China the exchange of gifts, favors, and banquets is critical to the development of relationships (or connections) known as guanxi. These connections are considered to be the single most important factor for success in China.

Id. (internal quotations and emphasis omitted). Another article explains that

[w]ithout guanxi, accomplishing anything in China is virtually impossible. . To develop guanxi the Chinese reciprocate giving gifts and doing favors. . . The reciprocity and mutual obligation aspects of guanxi increase the chances that a Chinese subsidiary will commit FCPA violations.

Nicole Y. Hines, Cultural Due Diligence: The Lost Diligence that Must be Found by U.S.

Corporations Conducting M&A Deals in China to Prevent Foreign Corrupt Practices Act

Violations, 9 Duq. Bus. L.J. 19, 56, 59 (2007).

Peterson has spent much of his life living in Asia. He learned Asian cultural traditions,

and they are as familiar, if not more familiar to him, than United States cultural traditions. His

childhood friend Pat Bollom wrote about Peterson's "inexperience with the United States" and

his lack of familiarity with U.S. "culture, expectations, and walks of'U.S. life." Exh. M.

Bollom wrote that Peterson "seemed to fit in better on the other side of the Pacific" and "thinks

more like an Asian than an American." Id.

As part of Peterson's Asian cultural understanding, he learned the Chinese business

culture of gift giving, or guanxi. See also Exh. C (Letter from Aw Sok-Ling, Peterson's wife)

("In China's business culture, having 'guanxi' (having contacts and influence) is of paramount

importance to getting things done."). John Portman, the Vice Chairman of a real estate company

with offices in Shanghai, echoed this contextual understanding of the Chinese business

environment in his letter to the Court. Portman described the "atmosphere" in China during the

21


time that Peterson worked at Morgan Stanley by saying that doing business "in China was in its

infancy stages, rules were few, enforcement was ambiguous and indecisive. The American

values of right and wrong, were, and are not practiced in China in the same manner as in

America." Exh. K.

In the context of illegal reentry cases, courts have recognized the relevance of cultural

context to sentencing considerations. In those cases, courts have held that "[c]ultural

assimilation may. . . be relevant to the character of a defendant. . . insofar as [the defendant's]

culpability might be lessened if [the defendant's] motives were familial or cultural rather than

economic." United States v. Todd, 618 F. Supp. 2d 1349, 1353-54 (M.D. Ala. 2009) (citing to

United States v. Lipman, 133 F.3d 726, 731 (9th Cir. 1998) (holding that "a sentencing court

may depart on the basis of cultural assimilation if it finds that the defendant's circumstances

remove his case from the heartland of cases governed by the relevant individual guidelines and

the Guidelines as a whole")). Though Peterson's motivations were partially economic, his

motivation for including the Chinese Official in the transaction was also cultural. Peterson felt

that it was a normal and expected part of doing business in China to trade favors with business

partners.

In addition to helping the Chinese Official to invest personally in a Morgan Stanley

investment at a beneficial price, Peterson also conspired to violate the FCPA by misleading

Morgan Stanley about the fact that he invested his mother's money in Asiasphere. Peterson was

frustrated that he had been forced to liquidate the investment he had made for his mother and

acted in part as a misguided self-help remedy, that is, secretly buying back into Project Cavity at

the same price at which he was forced to sell in order to restore his mother's investment in Site

#9.

22


Courts consider defendants' motives when setting the appropriate sentence under Section

3553(a). Ranum, 35' ) F. Supp. 2d at 990 (holding that the "defendant's culpability was mitigated

in that he did not act for personal gain or for improper personal gain of another"); accord United

States v. Peralta-Espinoza, 383 F. Supp. 2d 1107, 1112 (E.D. Wis. 2005) ("Motive is a relevant

sentencing consideration."). We ask the Court to consider Peterson's motives and the cultural

context of Peterson's crime when sentencing him.

b. Section 3553(a) (2) Factors

Next, Section 3553(a)(2) instructs the sentencing court to consider the need for the

sentence imposed to reflect the seriousness of the offense, to promote respect for the law, and to

provide just punishment for the offense; to afford adequate deterrence to criminal conduct; to

protect the public from further crimes of the defendant; and to provide the defendant with needed

educational or vocational training, medical care, or other correctional treatment in the most

effective manner. We contend that all of these factors have been and can be satisfied with a

below-guidelines sentence. As addressed below, there is a low risk that Peterson will commit

another crime. We believe that given the punishment that he has already endured, a non-

incarceratory sentence will both provide just punishment for the offense, and afford adequate

deterrence to others who contemplate committing similar conduct.

Punishment Peterson Has Suffered

Peterson has already suffered greatly as a result of his conduct in this matter.

He has suffered enormously financially. He lost his job at Morgan Stanley, his benefits,

his cash bonus for 2008 - which would have been, conservatively, around $500,000 for 2008

alone and his investment bonus, which he was told was worth several million dollars in 2007.

He settled with the SEC and forfeited $241,589 and the interest in the Cavity investment (which

is worth approximately $2.5 million), leaving him with

23


and a wife and two children to support. See Exh. C (Letter

from Aw Sok-Ling) (stating that "there hasn't been any income for more than three years. Bit by

bit, we have down-scaled our expenses" and describing how they are sending their children to

public school, eliminating private after-school activities, and how his wife is contemplating

moving in with her sister). In addition, in connection with his settlement with the SEC, Peterson

agreed to be barred from associating with financial organizations regulated by the SEC. This

Court has recognized that it is punishment to be barred from work in your chosen profession.

United States v. Mack, No. 08-CR-806, 2010 WL 3282648, at *2 (E.D.N.Y. Aug. 18, 2010)

('Specific deterrence is achieved through the impact of this conviction on the defendant's

employability, and specifically her inability in the future to pursue work in her chosen profession

in the field of corrections."). His settlement with the SEC also requires him to cooperate with

the receiver who was appointed to liquidate his mother's interest in Cavity.

Moreover, Peterson has been virtually unemployable. He has been unemployed for

nearly four years as he has awaited the disposition in this matter. John C. Portman, the Vice

Chairman of a real estate company in Shanghai, explained in his letter that he was interested in

Peterson working for him but he could not hire him while "a legal cloud hung over his head."

Exh. K. His future prospects are uncertain, though they are better the faster he can return to the

working world. At the current moment, John Poriman's company, has

expressed interest in hiring Peterson, and Jeremy Tarrier has expressed interest in opening

restaurants in Singapore with Peterson, See Exhs. K & L,

Any prison term will have a long term impact on Peterson's life. "[T]he impact of a

felony conviction may last a lifetime, and even a short period of incarceration has been shown to

affect people's earnings and ability to get a job, to be parents, and to become productive parts of

24


their communities." Doug McVay, Vincent Schiraldi, & Jason Ziedenberg, Justice Policy

Institute, Treatment or Incarceration: National and State Findings on the Efficacy of Cost

Savings of Drug Treatment Versus Imprisonment 3 (2004) 10

Since November 2008, when he admitted to Morgan Stanley attorneys that he had

violated Morgan Stanley rules, he has been living his life on pause, waiting for the disposition of

any investigation against him. He also spent a considerable time away from his family in the

United States in an effort to assist the Government's investigation. Though technically free at

that time, his desire to cooperate with the government required that he remain away from his

family. Peterson made clear to the Government that he was anxious to put this chapter of his life

behind him so that he can move on.

Over the nearly four years that have elapsed since he was fired from Morgan Stanley, he

has been technically free, but he has been in a state of constant waiting, not knowing how his

case would be resolved. Indeed, the stress of the investigation, led him to "attempt to jump from

the balcony" of his apartment in Singapore in March 2009 and his wife grabbed his legs before

he went over, while holding their baby son. Exh. C (Letter from Aw Sok-Ling); see also Exh. M

(Letter from Pat Bollom) ("During this time, he. . . re-lived his mistakes again and again.");

Exh. E (Letter from Eunice Ew and Agabus Lee) ("In my experience as a therapist, I see families

struggling with difficult times and this is one of the worst I have seen."). During this period, he

has been unable to find ajob that he could commit to, knowing that he may have to serve a

prison sentence in the United States. For the entire time, he expected that his case would be

concluded shortly. The waiting has been extremely stressful and draining for both Peterson and

his family. The stress a defendant suffers as a result of prosecution can be a factor considered in

'° This publication is available at: huitp://wwwiusticepolicy.orc/iniages/upload/04- 01 REP viDTreatrne.ntorincarcerationAC-DP.pdf.

25


sentencing. For example, the court in United States v. Gardellini, 545 F.3d 1089, 1091, 1095

(D.C. Cir. 2008), considered whether the district court's sentence of probation was unreasonable

under Booker. The D.C. Circuit affirmed the probationary sentence finding that it was not an

abuse of discretion to sentence a defendant to probation where the defendant had cooperated with

authorities, accepted responsibility for his crimes, and "suffered substantially due to his

prosecution" as shown by the fact that he was "treated for depression due to the stress of the

investigation." Id. (internal quotations omitted).

It is appropriate for the Court to to how Peterson has already been punished. See

United States. v. Samaras, 390 RSupp. 2d 805, 809 (E.D. Wis. 2005) (noting that where

defendant was convicted of fraud, a below-guideline sentence was warranted in part because "as

a consequence of his conviction and sentence, defendant lost a good public sector job, another

factor not considered by the guidelines"); Ranum, 353 F. Supp. 2d at 991 (sentencing defendant

to a below-guidelines sentence where "defendant's conviction had significant collateral effects on

him" including being "unable to work in banking again"); United States v. Redemann, 295 F.

Supp. 2d 887, 894-97 (ED. Wis. 2003) (sentencing defendant to a below-guidelines sentence

where defendant suffered collateral consequences from conduct including loss of his business

and payment of fines in related civil enforcement action and agreement to relevant bars).

We ask that the Court sentence Peterson to probation in recognition of the fact that he has

already been punished for his crime.

ii. Low Probability of Recidivism

Peterson's circumstances, including his age and absence of prior criminal history,

indicate a low probability of recidivism.

Peterson is 43 years old. Courts have recognized that the risk of reoffending goes down

for older defendants. Accordingly, courts have imposed below-guidelines sentences for

26


defendants over forty. See, e.g., United States v. Hernandez, No. 03 CR. 1257, 2005 WL

1242344, at *5 (S.D.N.Y. May 24, 2005) (imposing below-guidelines sentencing on a 48-year-

old defendant in part on the grounds that there was a low probability that he would recidivate

given his age); United States v. Carmona-Rodriguez, No. 04 CR 667, 2005 WL 840464, at *4

(S.D.N.Y. Apr. ii, 2005) (imposing a below-guidelines sentence on a 55-year-old defendant,

recognizing her low risk of reoffending, and noting that "[t]wo recent courts have declined to

impose Guidelines sentences on defendants who, like Carrnona-Rodriguez, were over the age of

forty on the grounds that such defendants exhibit markedly lower rates of recidivism in

comparison to younger defendants" (citing Simon v. United States, 361 F. Supp. 2d 35, 40

(E.D.N.Y. 2005) (recognizing that recidivism decreases with age and is not accounted for in the

Sentencing Guidelines) and United States v. Nellum, No. 2:04-CR-30, 2005 WL 300073, at *3

(N.D. Ind. Feb. 3, 2005) (same))). It is well settled that recidivism decreases with age. Indeed,

the United States Sentencing Commission published a report on recidivism and aging, and found

that for defendants in Criminal History Category I, as Peterson is, the recidivism rate for

defendants who are between the ages of 41 and 50 is 6.9%. In contrast, the recidivism rate for

defendants in Criminal History Category I who are under 21 is 29.5%. See United States

Sentencing Commission, Measuring Recidivism: The Criminal History Computation of the

Federal Sentencing Guidelines 28 (2004).11 We ask that the Court consider this factor in

sentencing.

In addition, Peterson falls within a criminal history category I, and has never spent any

time in jail before. Indeed, he has never been arrested. His crime was anomalous with

Peterson's otherwise law-abiding life, a factor this Court has considered. See United States v.

This publication is available at: http://www.ussc.oviResearchIResearch Publications/Recidivism/200405 Recidivism Criminal Histopf.

27


Rowe, No. 10-CR-607, 2011 WL 6019010, at *2 (E.D.N.Y. Nov. 29, 2011) (sentencing

defendant to time served and five years of supervised release, where the guidelines range was 70-

87 months, because the crime was "out-of-character with the defendant's prior law-abiding

life"). Moreover, courts regularly consider the fact that a defendant is a first-time offender when

deciding the appropriate sentence as considering this factor is consistent with Section 3553(a)'s

directive to consider "just punishment" and "adequate deterrence," § 3553(a)(2)(A) & (B). See

Cull, 446 F. Supp. 2d at 965-67 (imposing non-guideline sentence of 2 months in jail and 4

months home confinement, where advisory range was 10-16 months, for marijuana offense by

defendant who had never been confined, was sufficient to impress on him the seriousness of his

crime and deter others from offending); ç United States v. Qualls, 373 F. Supp. 2d 873, 877

(E.D. Wis. 2005) (noting that a shorter prison term is sufficient to deter someone who has not

been subject to prior lengthy incarceration). We ask that the Court consider the fact that

Peterson is a first-time offender and sentence him to a below-guidelines sentence.

c. The Kinds of Sentences Available

Under Section 3553(a)(3), the court is directed to consider the types of sentences

available.

Significantly, here home confinement appears not, as a practical matter, to be available in

this case because Peterson's home is in Singapore. Probation in Singapore appears to be

available. In any event, we ask the Court to recognize the unusual harshness of requiring

Peterson to serve a sentence in the United States and, accordingly, to fashion a sentence that

Peterson can serve in Singapore. See Gardellini, 545 F.3d at 1091 (affirming sentence of

probation to be served in Belgium where defendant lived with his wife and child) .12

12 If the Court sentences him to less than a year in prison, we ask the Court to recommend that he be placed at the Salvation Army Community Corrections Center in Asheville, NC, a halfway house less than a half hour from his

W.


The court may, but is not required to, order the defendant serve a term of supervised

release up to three years longt3 after any term of imprisonment that is ordered. 14 We ask that the

Court not impose a term of supervised release if it chooses to impose a term of imprisonment

under the unique facts of this case in which the defendant's family lives abroad and he has no

intention of working in the United States after he completes whatever term of imprisonment the

Court orders.

In the alternative, if the Court chooses to impose a term of supervised release after the

defendant's term of imprisonment, we ask that the Court set the conditions of the supervised

release so that Peterson serve it in Singapore. His wife and children live in Singapore. He

intends to work in Singapore whenever he is allowed to return. He has limited contacts in the

United States.

The Court has the authority, if it chooses to set a term of supervised release, to set the

conditions so that Peterson could return to Singapore to live with his family when he completes

whatever term of imprisonment is imposed. Section 3583(d) provides certain conditions that

must be included in a term of supervised release. None of the mandatory conditions of a term of

supervised release under 18 U.S.C. § 3583(d) require the defendant to be in the United States.

sister's house. If the Court sentences him to more than a year in prison, we ask the Court to recommend that he be designated to the minimum security camp in Edgefield, SC, which is approximately two and a half hours from his sister's house.

Section 3583(b) authorizes the maximum length of supervised release depending on the class of felony that the defendant was convicted of. Pursuant to 18 U.S.C. § 3559(a)(4), Peterson's offense is a Class D felony because up to a five-year sentence is authorized. Under Section 3583(b)(2), the Court is authorized to impose up to three years of supervised release after Peterson is released from prison.

14 Under Section 3583(a) of Title 18, the court "may" impose a term of supervised release, unless supervised release is mandated by statute, in which case supervised release must be ordered. The FCPA does not mandate supervised release. Under the sentencing guidelines, U.S.S.O. § 5D1 .1 calls for a term of supervised release in the case of any prison sentence over a year. This directive is only applicable if the Court chooses to sentence Peterson to more than a year in prison. Moreover, this directive, like the rest of the guidelines, is merely advisory. See United States Sentencing Commission, Federal Offenders Sentenced to Supervised Release, 51 & 5-6 n.19-22 (2010) (discussing the narrow list of crimes, not relevant here, that require mandatory supervised release).

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We therefore ask that the Court permit Peterson to serve any term of supervised release in

Singapore, and to set the conditions of any term of supervised release accordingly.

Several cases confirm our view that the Court has authority to allow a defendant to serve

a term of supervised release in another country. Indeed, this Court has ordered that supervised

release be served in a different country. See United States v. Delgado, 994 F. Supp. 143, 146

(E.D.N.Y. 1998) (holding that "[s]ince defendant will be deported, the five year period of

supervised release need not be served in this country"). Other courts have come to the same

TT 1 C fl 1 11 (+1 C'. 1 flfl')\ u1,-1,1 that the law conclusion. uuwu tates v. rugiiese, 960 F.2d 913, yv .

provides "no direct impediment to authorizing a person on supervised release to leave the United

States, if the supervision the judge believes is necessary can be enforced abroad")

It is clear that the Court has - and has previously exercised - the authority to set

conditions of supervised release to allow a defendant to live abroad during supervised release.

This case presents the appropriate factors for the Court to choose to exercise its discretion in this

way. Accordingly, we ask the Court to either decline to order a term of supervised release, or to

set the conditions of the supervised release term such that Peterson can serve it in Singapore with

his family.

d. The Sentencing Range in Guidelines

The Court is directed by Section 3553(a) (4) to consider the sentencing range under the

Sentencing Guidelines. The Government has calculated Peterson's Sentencing Guidelines range

to be 51 to 63 months, capped at 60 months, based on a total offense level of 24. Eighteen points

of the offense level are driven by the loss calculation. 15 The amount of the loss drives the

guidelines range.

15 We agree with the Government that the loss is properly calculated as between $2.5 million and $7 million under the directives in the sentencing guidelines.

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The agreed upon loss amount here is based on the amount of money Morgan Stanley

would have made on the portion of the Cavity investment that it sold to Asiasphere had it

retained that portion of the Cavity investment. But Morgan Stanley was willing to sell a portion

of the Cavity investment. It just was willing to sell it to a different party than it sold to. By

selling to the wrong party, Morgan Stanley was not robbed of the asset in the traditional way.

The loss amount is based on a market calculation done in 2010. The amount of loss

depends on the overall market for real estate in China, and thus reflects a degree of arbitrariness.

(C r T T See Smirlock v. United States, No. 04 CV 9670, 2005 WL 975875 JJ.1N.1. Apr. 25, 2005)

(noting that during sentencing the court considered the fact that "the amount of loss that actually

winds up resulting from a person's conduct can be arbitrary and can result from any number of

factors in the market, and may not reflect with precision the seriousness of misconduct" (ellipsis

and internal quotation marks omitted)). If the market for real estate in China had moved in the

opposite direction, and the asset had decreased in value, Morgan Stanley's sale to Asiasphere

would have shielded it from losing money. The Sentencing Guidelines applicable to this case

recognize that the loss amount may cause the guideline to overstate the seriousness of the

offense. Under U.S.S.G. § 2B1 .1 cmt. n. 19(C), the Guidelines indicate that "[t]here may be

cases in which the offense level determined under this guideline substantially overstates the

seriousness of the offense." This note has undergone revisions over the years, and previous

versions indicated that "[w]here the loss determined above significantly understates or overstates

the seriousness of the defendant's conduct, an upward or downward departure may be

warranted." U.S.S.G. § 2F1.1 cmt. n. 8(b) (2000). This change was "one of style rather than

substance." United States v. Roen, 279 F. Supp. 2d 986, 990 (E.D. Wis. 2003). We ask that the

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Court consider the fact that Peterson's guideline range is primarily driven by a loss figure that is

somewhat arbitrary when setting Peterson's sentence.

e. The Need to Avoid Unwarranted Disparities

Section 3553(a)(6) instructs the Court to consider "the need to avoid unwarranted

sentence disparities among defendants with similar records who have been found guilty of

similar conduct" during sentencing. In an article published in Business Crimes Bulletin, Gary

Stein observed that there is a "growing rift between the views of the DOJ and the courts as to the

appropriate sentences for individual violators in FCPA cases" and that recent sentencing

decisions have not supported prosecutors' efforts to obtain lengthy prison sentences for FCPA

violators. Gary Stein, Sentencing of Individuals in FCPA Cases, Business Crimes Bulletin, Vol.

18, No. 5, Jan. 2011. Stein listed a series of recent cases, and found that courts had imposed

sentences "amounting to roughly 10%, or less, of the government's recommended sentence." Id.

Stein found that in FCPA cases "a Guidelines sentence is the exception rather than the norm,"

and that post-Booker, 81% of defendants who have been sentenced for FCPA violations have

received below-guidelines sentences. Id. We ask the Court to sentence Peterson to a below-

guidelines sentence to avoid creating an unwarranted disparity with other defendants sentenced

for FCPA violations.

f Restitution

Finally, Section 3553(a)(7) directs the Court to consider "the need to provide restitution

to any victims of the offense." In this case, the only possible victim Morgan Stanley has

waived restitution. Under the Mandatory Victim Restitution Act of 1996 ("MyRA"), the

purpose of restitution has shifted away from punishment to a means of repairing the victim's

losses. See, e.g., United States v. Aguine-Gonzalez, 597 F.3d 46, 51(1st Cir. 2010) ("The

MVRA's changes reflect a fundamental shift in the purpose of restitution away from its strictly

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penal origins; the new restitution scheme is not merely a means of punishment and rehabilitation,

but an attempt to provide those who suffer the consequences of crime with some means of

recouping the personal and financial losses." (internal quotation marks and alterations omitted)).

Since Morgan Stanley has expressed that it is uninterested in restitution, there is no need for

restitution in this case. See, e.g., United States v. Placensio, No. 10-CR-20699, 2011 WL

7807880, at *1 (S.D. Fla. June 28, 2011), report and recommendation adopted, No. 10-CR-

20699, 2012 WL 1606093 (S.D. Fla. May 8, 2012) ("Because restitution is for victims and no

+ T +1+ 4 victim 5piuu e government's outreach attempLs ... recommend

District Court order NO RESTITUTION ($0)"). To the extent that restitution can act as an

additional form of punishment, there is no need for additional monetary punishment in this case.

The SEC has settled with Peterson and has left him with little to live on. 16 That amount is being

used to support his wife and children. Peterson has not been left with any proceeds of his crime.

The Court has the authority to impose a criminal fine. Under the advisory guidelines,

[t]he court shall impose a fine in all cases, except where the defendant establishes that he is

unable to pay and is not likely to become able to pay any fine." US.S.G. § 5E1.2(a). In setting

the amount of the criminal fine, the Sentencing Guidelines also direct the Court to consider 'the

burden that the fine places on the defendant and his dependents relative to alternative

punishments" and "any collateral consequences of conviction, including civil obligations arising

from the defendant's conduct." U.S.S.G. § 5E1.2(d)(3) & (5). Here, because of Peterson's

settlement with the SEC, a collateral consequence of his conduct, the burden of a fine on his wife

and children is great. Peterson's family needs the money left over after his settlement with the

SEC to pay regular living expenses. Accordingly, we ask that the Court waive any fine in this

6 The Government has waived forfeiture based on Peterson's settlement with the SEC.

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case. Based on Peterson's economic status, the SEC decided to waive a fine above the

disgorgement. We ask that the Court also decline to impose any criminal fine because of his

strained economic position.

Conclusion

The Court should consider a sentence with no or minimal incarceration and with any

probation or non-incarceration portion of Peterson's sentence to be served in Singapore.

LANKLER SIFFERT & WQFIL LLP

By: 4A/1 Abiail E. Rose'n (AR-87A8)

/ / frrank H. Wohi (FW-1737)

500 Fifth Ayenue,33 rd Floor Newcwk'NY 10110 Tel: (212) 921-8399

Attorneys for Defendant Garth Peterson

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