UNITED STATES DISTRICT COURT
In this Memorandum, the United States responds to the numerous objections made by defendant Anthony J. Giordano, Jr. ("Giordano, Jr." or "defendant") in response to the Presentence Investigative Report prepared by the United States Probation Office ("USPO"). The responses of the United States correspond with the paragraph numbers of the objections made by Giordano, Jr.
In its preliminary statement, Giordano, Jr. again rehashes his opinion that the difference between "picked-up" and "delivered" prices is important. The distinction drawn by him bears no significance to this sentencing proceeding. Pursuant to the price-fixing and market allocation agreement reached at Sea Ranch, the defendants agreed on a maximum price that each co-conspirator would pay to specific suppliers of scrap and for various grades of scrap, both generally and with respect to particular suppliers. The fact that Atlas may have cheated on the agreement does not affect the volume of commerce attributable to it (and Giordano, Jr.) under U.S.S.G. §2R1.1. The United States treats this red herring issue raised by Giordano, Jr. fully in its response to Paragraph 34 below.
RESPONSES TO OBJECTIONS
PART A. THE OFFENSE
The Offense Conduct
Paragraph 6: The Indictment charged that, beginning at least as early as October 24, 1992, and continuing at least until November 23, 1992, the exact dates being unknown to the grand jury, the defendants and co- conspirators engaged in a combination and conspiracy to suppress and restrain competition by fixing the price of scrap metal, and allocating suppliers of scrap metal, in southern Florida. Indictment, ¶ 2. In its Bill of Particulars, the United States stated: "By way of further explanation, the United States believes that the conspiracy alleged in the Indictment ended sometime in January, 1993." Bill of Particulars, p. 8. The evidence at trial showed that the conspiracy continued into January, 1993. Moreover, U.S.S.G. §1B1.3 specifically provides that all relevant conduct be taken into consideration in determining the applicable guideline sentencing range.1
Giordano, Jr. is wrong in stating that very few of the summaries introduced at trial extended beyond November 23, 92. For Atlas, nearly all of the summaries relating to car suppliers were extended to December 31, 1992. The figures used by the United States in calculating the volume of commerce affected by the conspiracy and attributable to Giordano, Jr. are based on Atlas business records (scale tickets and summary reports) admitted into evidence at trial.
Paragraph 7: This objection is poorly taken. The uncontroverted testimony at trial was that Sunshine was Atlas' major competitor in the Miami market. Trial Transcript (McConnell), p. 98.
Paragraph 8: The United States does not understand this objection. The Sea Ranch meeting occurred close enough in time to Hurricane Andrew to justify the statement that the price-fixing and market allocation agreement was struck shortly after Hurricane Andrew. Hurricane Andrew struck southern Florida on August 24, 1992. The uncontroverted evidence at trial showed the defendants met initially at Charcoal's restaurant on September 21, 1992, to discuss prices and customers relating to Hurricane scrap. A second meeting was held on October 14, 1992, at a restaurant called Casa D'Oro, where the subject of Hurricane scrap again was discussed. Henry Kovinsky testified that Hurricane scrap was a principal subject discussed at Sea Ranch. See, e.g., Trial Transcript (Kovinsky), p. 1505. In his testimony, Kovinsky connected the "Hurricane" scrap discussion at Sea Ranch with the preliminary meetings at Charcoal's and Casa D'Oro. Id. In addition, pursuant to U.S.S.G. §1B1.3, the meetings at Charcoal's and Casa D'Oro is properly included as relevant conduct in setting the Guidelines offense level for Giordano, Jr.
Paragraph 9: Giordano, Jr. would have this Court believe that the collusive deal struck at Sea Ranch just happened one day -- apparently out of the blue. That is not the case. Prior to the Sea Ranch meeting, there were two preliminary meetings between the defendants, one of which occurred at Charcoal's restaurant. The meetings at Charcoal's and Sea Ranch are directly connected to each other. Without question, the meeting at Charcoal's -- which occurred less than one month prior to the Sea Ranch meeting -- planted the seed for the defendants' collusion in southern Florida.
Henry Kovinsky testified at trial that a meeting took place on Septembe 21, 1992, at Charcoal's restaurant. Trial Transcript (Kovinsky), p. 1523-24. Participants at this meeting included the defendants Anthony Giordano, Jr., David Giordano and Randolph Weil. Id. at p.1523. Kovinsky described the Charcoal's meeting as a "kind of feeling out process." Id. Although the defendants may have talked about the possibility of a joint venture to salvage scrap relating to Hurricane Andrew, that was not the only subject discussed. Kovinsky testified as follows:
Trial Transcript (Kovinsky), pp. 1525-26 (emphasis added).
Kovinsky testified at trial that Hurricane pricing was among the subjects discussed at the Sea Ranch meeting:
Trial Transcript (Kovinsky), p. 1505.
The meeting at Charcoal's was a preliminary meeting that opened the door to the collusive deal struck at Sea Ranch. Pursuant to U.S.S.G. §1B1.3, the Charcoal's meeting is relevant conduct to be considered in establishing the Guidelines' offense level for Giordano, Jr.
Paragraph 10: This objection is poorly taken. There is substantial evidence in the record to support the USPO's statement that as the result of the Charcoal's meeting, "[i]t was perceived that what Giordano, Jr. wanted was to fix prices first, see how that worked, and then possibly merge." PSI (Giordano, Jr.), ¶ 10. A reference to this is contained in a calendar entry made by Henry Kovinsky dated September 22, 1992 -- the day after the meeting at Charcoal's. Trial Exhibit 2 ("Phoned Tony Giordano, Jr. -- Suggested merger as only way they are interested but want [to] crawl first then merge."). In addition to talking about a possible joint venture, Kovinsky testified: "You know, they talked Hurricane -- basically, Hurricane was a chief topic of discussion as well, on top of the merger and joint venture." Trial Transcript (Kovinsky), p. 1669. Hurricane scrap was also a major part of the discussion at Sea Ranch. Clearly, pursuant to U.S.S.G. §1B1.3, the meeting at Casa D'Oro should be included as relevant conduct in establishing the Guideline offense level for Giordano, Jr.
Paragraph 11: This objection is not well taken. Henry Kovinsky testified that on top of any merger or joint venture discussion, the defendants also talked about the Hurricane at Casa D'Oro. Trial Transcript (Kovinsky), p. 1670. Hurricane scrap also was a principal part of the discussion at Sea Ranch. Id. at p. 1669. Pursuant to U.S.S.G. § 1B1.3, the meeting at Casa D'Oro should be included as relevant conduct in establishing the Guidelines' fine for Atlas.
Paragraph 13: This objection is groundless. Sheila McConnell's testimony on this subject is not ambiguous. McConnell testified as follows:
Trial Transcript (McConnell), pp. 135-37 (emphasis added).
Accordingly, the USPO's statement that while driving to the Sea Ranch meeting Giordano, Jr. indicated to McConnell that the purpose of the meeting was to fix prices is amply supported by the evidence adduced at trial.
Paragraph 14: This objection is misplaced. The evidence adduced at trial amply supports the USPO's statement that Anthony Giordano, Jr. and Atlas were part of a collusive arrangement in Cleveland with their main competitor, Luria Brothers. Sheila McConnell testified that while she was employed by Luria Brothers, Giordano, Jr. called her superiors (Dave Wonkovich; Chip Hering; and/or Michael Gillespie) on at least 10 occasions and complained about McConnell's pricing to scrap suppliers and her quoting accounts that Giordano, Jr. believed were his. Trial Transcript (McConnell), pp. 143-49. At the time, Luria Bothers was one of Atlas' major competitors in the Cleveland area, as well as its closest competitor. Id. at 146; 1092. McConnell testified that she, too, participated in some of these telephone conversations between Giordano, Jr. and her superiors at Luria Brothers. Id. at 144; 1091. McConnell described these telephone conversations as follows:
Trial Transcript (McConnell), p. 148. Seealso Trial Transcript (McConnell), pp. 1092-93.
McConnell testified that, on at least one occasion, Giordano, Jr. specifically told her and her superiors that she was inflating the market price in Cleveland by quoting higher prices than Atlas. Id. at 1095. As the result of Giordano, Jr.'s complaints to her superiors, McConnell "was instructed not to actively and aggressively quote the accounts and not to solicit them." Id. at 149. McConnell testified that when she refused to stay away from Atlas accounts as instructed, she was fired from Luria Brothers. Id. at 1098.
The evidence adduced at trial clearly showed Atlas and the Giordano, Jr. transported their collusive methods and conduct from Cleveland to Miami. Indeed, their collusive conduct in Miami was strikingly similar to their collusive conduct in Cleveland. Even if the conduct in Cleveland is not relevant conduct under U.S.S.G. §1B1.3, it is certainly information that, pursuant to U.S.S.G. §1B1.4, should be considered in determining what sentence to impose within the Guideline range. Under U.S.S.G. §1B1.4, "the court may consider, without limitation, any information concerning the background, character and conduct of the defendant, unless otherwise prohibited by law."
Paragraph 15: This objection is groundless. Ben Tripodo testified at length about a meeting that occurred at Atlas' headquarters in Cleveland in March, 1991. Trial Transcript (Tripodo), pp. 1416-1437. Tripodo testified that, while he was responsible for buying scrap for Luria Brothers, he was instructed by his superiors (Chip Hering and Dave Wonkovich) to attend a meeting at Atlas with the Giordanos. Id. at 1432. According to Tripodo, this meeting was prompted by his soliciting an account in Shaker Heights, Ohio, an account which Atlas (and the Giordanos) believed belonged to Atlas. Tripodo was told by his superiors at Luria that they needed to meet with Atlas because "there was a problem with a scrap account for the shredder, and we needed to go over to discuss it." Id. at 1433. Anthony Giordano, Sr. began the meeting by stating: "What the fuck is going on? I thought we had an understanding." Id. at 1430 (emphasis added.) Tripodo testified that at this meeting, "[t]he nature of the discussion was scrap accounts that Tony, Senior believed was theirs and that we should stay away from." Id. at 1431. The following colloquy took place:
Trial Transcript (Tripodo), pp. 1431-32.
After this meeting took place, Tripodo reported the incident to the president of Luria Brothers, Bob Hahn. Trial Transcript (Tripodo), pp. 1434-35. After Bob Hahn got back to Tripodo, Tripodo instructed his subordinate (John Head) that he was free to call on all accounts: "[T]here was no account off the sheet or out of bounds, and especially the Shaker Heights account." Id. at 1436.
Paragraph 16: This objection is not well taken. McConnell testified that Giordano, Jr. gave her a price list that originated from Luria Brothers (Atlas' main competitor in Cleveland) and was sent to Anthony Giordano, Jr. via fax. Trial Transcript (McConnell), pp. 427-28. See Government Exhibit 3. McConnell testified that there were handwritten notations made on the price list -- in a handwriting that she recognized as Michael Gillespie's of Luria Brothers. Id. at p. 429. McConnell then testified as follows:
Trial Transcript (McConnell), pp. 429-430.
Paragraph 17: This objection is not well taken. Henry Kovinsky testified as follows about the Sea Ranch meeting:
I remember Randy [Weil] really accusing, almost, the Miami River Recycling, Giordanos and Sheila, mainly, for running after Danielli, for example, and giving prices or suggesting prices that were higher than what the marketplace should be.
Trial Transcript (Kovinsky), p. 1506.
The following colloquy also took place with Kovinsky:
Trial Transcript (Kovinsky), p. 1515 (emphasis added).
The evidence adduced at trial clearly supports the USPO's statement that the purpose of the meeting was for Atlas and Sunshine to lower their prices. Indeed, defendant Randolph Weil insisted at Sea Ranch that Atlas and the Giordanos were overpaying for scrap. The record amply shows that Weil was concerned about its main competitor -- Atlas -- overpaying for scrap. By overpaying for scrap, Atlas forced Sunshine to raise its prices or risk losing suppliers. There is ample evidence in the record to support the proposition that in the scrap metal industry, the profitability of companies like Atlas and Sunshine is dependent on how cheaply scrap can be purchased.
In addition, Shelia McConnell testified that, at the time of the Sea Ranch meeting, she was aggressively quoting higher prices in the market. Trial Transcript (McConnell), p. 191. According to McConnell, "There was basically a price war going on at that time." Id. (emphasis added). McConnell further testified that the market with respect to car suppliers had gotten particularly high. Id.
As the jury found, this competitive situation was resolved by the defendants' collusive agreement reached at Sea Ranch.
Paragraph 18: This objection concerning the authenticity of McConnell's notes of the Sea Ranch agreement is ridiculous. McConnell testified that Giordano, Jr. directed her to take notes of the agreement reached at Sea Ranch and she did as she was told. Trial Transcript (McConnell), pp. 195-96. See Government Exhibit 1 (McConnell's notebook containing notes of the Sea Ranch meeting, dated October 24, 1992); Government Exhibit 1(a) (McConnell's notes of the Sea Ranch meeting). Indeed, McConnell's testimony about her notes of the Sea Ranch meeting -- and events related to these notes -- run from pages 193 to 243 of the trial transcript. The fact that Henry Kovinsky may not recall anyone taking notes at a meeting that took place nearly six and a half years prior to his testimony in no way supports the defendant's preposterous argument that McConnell did not take notes at Sea Ranch. As was the case at trial, the authenticity of McConnell's notes remain unquestioned.
Paragraph 21: This objection is poorly taken. McConnell testified that, at the Sea Ranch meeting, it was agreed that Atlas and the Giordanos would stay away from suppliers located on Cairo Lane, which was the street on which Sunshine was located, and in return Atlas would receive a shipment of cars originating from the Bahama Islands. Trial Transcript (McConnell), pp. 163-65. This more than justifies the USPO's statement about this quid pro quo arrangement.
Paragraph 22: This objection is unfounded. Giordano, Jr. continues to be confused by the difference between the illegal agreement and its implementation. The illegal agreement was struck at Sea Ranch. McConnell testified at trial that, at the Sea Ranch meeting, the defendants agreed on the maximum price each would pay for various grades of scrap, commonly referred to as scale prices. McConnell testified:
Trial Transcript (McConnell), p. 223.
McConnell testified that, at the Sea Ranch meeting, the defendants fixed the maximum scale price each would pay for the following grades of scrap: (1) appliances ($20/net ton); (2) sheet metal ($26/net ton); (3) unprepared #2 ($30/net ton; (4) prepared #2 ($38/net ton); (5) unprepared #1 ($30/net ton); and (6) logs ($35/net ton). Trial Transcript (McConnell), pp. 227-29. McConnell's trial testimony is the same as her grand jury testimony.
The colloquy cited by Giordano, Jr. proves nothing other than that Atlas cheated on the agreement. The lack of full implementation, however, does nothing to undercut the central fact that Giordano, Jr. and his co-conspirators fixed the maximum price that each company would pay for various grades of over-the-scale scrap. Moreover, Sunshine did follow the agreement on scale prices and the co- conspirators are liable for Sunshine's collusive conduct.
Paragraph 25: This objection is not well taken. There is ample evidence in the record to support the USPO's statements that Atlas needed a certain amount of tons for its shredder and, further, that one of the goals of the conspiracy was to satisfy the Giordanos' request for a certain volume of tons. Kovinsky testified that, among other things, the subject of tonnages was discussed and agreed-upon at Sea Ranch. Trial Transcript (Kovinsky), p. 1505-06. Kovinsky testified:
Trial Transcript (Kovinsky), pp. 1505-06. Seealso Trial Transcript (Kovinsky), p. 1512. Kovinsky's testimony is clear: Atlas wanted a certain amount of tonnage in order to agree to lower prices. Id. at 1512.
In support of its ill-conceived argument, Giordano, Jr. cites to a part of Kovinsky's testimony having nothing to do with the Sea Ranch meeting whatsoever. In paragraph 15 of its Objections, Giordano, Jr. cites to page 1667 of the trial transcript. This colloquy is limited to the meeting at Casa D'Oro; it has nothing to do with the tonnage arrangement which the Giordanos insisted upon at Sea Ranch. Kovinsky's testimony that the defendants talked about tonnages at Sea Ranch remains uncontroverted.
Paragraph 29: This objection is not well taken. The description of events contained in this paragraph is consistent with McConnell's testimony. McConnell testified that, after the Sea Ranch meeting, she and Giordano, Jr. went back to Atlas' office in Miami. Trial Transcript (McConnell), pp.159; 181. Giordano, Jr. and David Giordano met in David's office behind closed doors. Id. at 182. After David Giordano met with his brother, McConnell testified that David exited his office and exclaimed: "[D]rop the prices." Id. at 183; 298. Consistent with the Sea Ranch agreement, McConnell testified she "went to [her] office to start dropping [prices]." Id. at 298. The fact that not all scale prices were dropped -- because Atlas cheated on the agreement -- is not relevant. The evidence at trial conclusively established that, consistent with the Sea Ranch agreement, Atlas did drop prices on cars (both flattened and whole) and certain grades of scrap.
Paragraph 31: Again, Giordano, Jr. confuses the illegal agreement with its implementation. McConnell testified that the defendants agreed to drop their scale prices, setting maximum prices to be paid for various grades of scrap. Atlas and Sunshine documents (scale tickets and summaries of scale tickets) conclusively show the defendants did, in fact, drop their prices pursuant to the collusive agreement. In particular, Atlas and Sunshine followed the agreement most closely with respect to the agreed-upon prices to be paid to car suppliers. In many cases, the prices actually paid to the car suppliers by the defendants were identical.
Giordano, Jr. continues, however, to confuse issues with his muddled argument about the difference between "delivered" and "picked-up" prices. Again, this issue concerns only the implementation of the illegal agreement; it does not undercut in any way the uncontroverted testimony of McConnell and Kovinsky that the defendants struck a deal at Sea Ranch fixing the maximum price to be paid to specific suppliers, fixing the maximum price to be paid to suppliers within specific geographic areas, and fixing the maximum price to be paid for specific grades of scrap.
Paragraph 34: This objection concerning the volume of commerce affected by the conspiracy and attributable to Giordano, Jr. is misguided. The United States submits that, based on the evidence, the volume of commerce affected by the conspiracy and attributable to Giordano, Jr. is $614,436.39. See U.S.S.G. §2R1.1. Further, U.S.S.G. §1B1.3 provides that all relevant conduct may be considered in establishing the appropriate Guidelines offense level for a defendant and the concomitant criminal fine.
Giordano, Jr.'s reliance on the district court opinion in United States v. SKW Metals & Alloys, Inc., 4 F. Supp. 2d 166, 167 (W.D.N.Y. 1997) ignores contrary -- and more compelling -- relevant case law. In United States v. Hayter Oil Co., Inc., 51 F.3d 1265 (6th Cir. 1995), the Sixth Circuit agreed with the government's conclusion that "there is nothing in the language of the Antitrust Guideline [U.S.S.G. §2R1.1,] that suggests that the Sentencing Commission intended the district court ç²xclude from a defendant's volume of commerce sales of a product that was the direct object of a price-fixing agreement, because those sales were made at less than the agreed-upon price.'" Hayter Oil, 51 F.3d at 1273. Rather, the court in Hayter Oil held:
Construing the plain language of the Antitrust Guideline, we conclude that the volume of commerce attributable to a particular defendant convicted of price-fixing includes all sales of the specific types of goods or services which were made by the defendant or his principal during the period of the conspiracy, without regard to whether individual sales were made at the target price.
Hayter Oil, 51 F.3d at 1273.
The Hayter Oil court found its conclusion about the application of the Antitrust Guideline to be "consistent with the purposes of the Sherman Act." Hayter Oil, 51 F.3d at 1273. The court acknowledged that all price-fixing agreements are illegal per se. Id. The court in Hayter Oil posited the following:
It would be an anomaly to declare price- fixing illegal per se, without regard to its success, merely because of its plainly anticompetitive effect, but to provide for a fine only if the price-fixing were successful. Such a rule would result in the government being relieved of the burden of ascertaining a conspiracy's effect and success for purposes of obtaining a conviction only to have to bear that very burden to establish the propriety of any fine.
Hayter Oil, 51 F.3d at 1274.
In addition, the court in Hayter Oil found that its interpretation of U.S.S.G. §2R1.1 is entirely consistent with the Sentencing Commission's Commentary to the Antitrust Guideline, which is to be given controlling weight so long as it does not violate the Constitution or a federal statute. Hayter Oil, 51 F.3d at 1274. The Court stated that it "clearly appears that the Sentencing Commission intended that the government have the benefit of a per se rule both at trial and at sentencing to avoid the protracted inquiry into the day-to- day success of the conspiracy." Id. Accordingly, the Hayter Oil court rejected the defendants' argument that the volume of commerce attributable to them consisted of only the 40 weeks when the conspirators successfully achieved their target price, and instead held that the volume of commerce for purposes of sentencing under U.S.S.G. §2R1.1 involved "all sales of gasoline made by the defendants during the entire 234-week period of the conspiracy." Id.
Giordano, Jr. also ignores the recent decision in United States v. Michael D. Adreas, et al., 1999 WL 51806 (N.D. Ill.), in which the court followed the reasoning of the Sixth Circuit in Hayter Oil and expressly rejected the district court's reasoning in SKW Metals. Andreas, at *2. In Andreas, the court concluded that the decision in SKW Metals "is flawed because it imposed a narrow construction of affect based on an erroneous interpretation of §2R1.1's background and application notes." Andreas, at *2. The court stated: "Indeed, the application notes clearly demonstrate that affect should be broadly construed in a manner to effectuate the per se rule." Id. According to the Andreas court,
Whether the agreement actually caused the objective price increase is irrelevant because the definition [of "affect" neither guarantees nor requires the causal force to induce a response or reaction. Instead the stimulus must present a possible response or reaction. Hence, the plain meaning permits a broad construction to attach liability even if there is only a theoretical affect on commerce, regardless of its actual effect on the price of lysine.
Andreas, at *2.
Accordingly, the court held consistent with Hayter Oil that, for sentencing purposes under U.S.S.G. §2R1.1, all domestic lysine sales made by the Archer Daniels Midland Corporation during the scope of the conspiracy should be included as volume of commerce attributable to the defendant, Michael Andreas. Andreas, at *3.
Accordingly, the United States submits that all of the scrap purchases made by Atlas during the duration of the conspiracy, and which were within the scope of the price-fixing and market allocation agreement, are properly included as volume of commerce under U.S.S.G. §2R1.1. The categories of scrap that were unequivocally objects of, and subject to, the conspiracy (and therefore "affected" by it) include the following: (1) flattened cars, including the specific suppliers listed in McConnell's notes; (2) whole cars; (3) appliances; (4) sheet metal; (5) unprepared #2; (6) prepared #2; (7) prepared #1; and (8) logs. Each of these grades of scrap were objects of, and subject to, the conspiracy. In addition, the United States submits that the category of scrap which Atlas referred to as "shred" should also be included in the volume of commerce. Because Atlas classified its scrap differently than Sunshine, this "shred" grade included the agreed-upon prepared and unprepared grades of scrap.2
The documents (i.e., scale tickets and summaries) admitted at trial show the conspiracy continued at least through December 31, 1992. Though there was some cheating on the agreement, mostly by Atlas, there was no affirmative withdrawal from the conspiracy by either Atlas or Sunshine before December 31, 1992. In January, 1993, however, the documents admitted at trial show that the conspiracy began to break down. Accordingly, the United States submits that the conspiracy continued through December 31, 1992. At the sentencing hearing, the United States will submit detailed summaries setting forth the volume of commerce affected by the conspiracy.
Using the scale tickets and other business records of Atlas, the United States has added up the volume of commerce affected by the conspiracy and attributable to Atlas for the period October 24, 1992 through December 31, 1992. That figure is $614,436.39.
Giordano, Jr's argument that Atlas' freight costs should be deducted from the volume of commerce attributable to him finds no support in U.S.S.G. §2R1.1 or relevant case law. The figures used by the United States in calculating the volume of commerce attributable to Giordano, Jr. are the actual amounts paid to suppliers for their scrap. These actual amounts represent the true amount of the volume of commerce affected by the conspiracy. You would no more deduct freight costs from the volume of commerce than you would any other cost-accounting component of overall cost (e.g., plant, power, equipment, labor, etc.).
Accordingly, pursuant to U.S.S.G. §2R1.1, the United States agrees with the method used by the USPO in arriving at the volume of commerce affected by the conspiracy and attributable to Giordano, Jr. for sentencing purposes.3 In addition, Giordano, Jr.'s contention finds no support in U.S.S.G. §1B1.3, which provides that all relevant conduct should be included in arriving at the volume of commerce attributable to him.4 Giordano, Jr. attempted to confuse the jury with his "picked-up" versus "delivered pricing" spiel at trial, but failed. His attempt to confuse issues at sentencing with the same spiel should also fail.
Paragraph 36: Giordano, Jr. tries to break new ground with this objection. The case cited by Giordano, Jr., Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 769 (1984), is a substantive rule of antitrust law that applies to the Sherman Act, 15 U.S.C. § 1. In Copperweld, the Court held that for purposes of 15 U.S.C. §1, a parent company (Copperweld) is incapable of conspiring with its wholly owned subsidiary. Copperweld, 467 U.S. at 777. This substantive antitrust rule, however, has no application whatsoever to the Sentencing Guidelines, including U.S.S.G. §3B1.1(a). Copperweldhad nothing to do with the application of the Sentencing Guidelines, which serve a far different purpose. Giordano, Jr. cites no case holding that Copperweld acts as a bar to the individual role enhancement for him under U.S.S.G. §3B1(a).
U.S.S.G. §3B1.1(a) provides that an increase in the offense level should be applied "If the defendant was an organizer or leader of the criminal activity that involved five or more participants or was otherwise extensive." U.S.S.G. §3B1.1(a) (emphasis added). In this price-fixing and market-allocation conspiracy, there were more than five participants. Application Note 1 of this Guideline provides: "A å¢articipant' is a person who is criminally responsible for the commission of the offense, but need not have been convicted." At a minimum, at least seven individuals participated in the conspiracy and were criminally responsible for it, including the following: Anthony Giordano, Jr.; Anthony Giordano, Sr.; David Giordano; Randolph Weil; Henry Kovinsky; Dan Allen; and Sheila McConnell.
In addition, the conspiracy here was "otherwise extensive." U.S.S.G. §3B1.1(a).5 Though not particularly long in duration, the conspiracy was very broad in terms of geographic and product scope.6 The defendants entered into an illegal agreement covering nearly all of their scrap purchases in southern Florida, including their most important commodity for shredding purposes, cars. Pursuant to their illegal agreement, the defendants fixed the price to be paid to specific car suppliers; fixed the price to be paid to car suppliers in specific geographic areas; fixed the price to be paid on a variety of scrap grades, which primarily affected the smaller peddler traffic; and agreed not to solicit certain customers (e.g., customers located on or near Cairo Lane). At the time, Atlas and Sunshine were the predominant shredders operating in south Florida, especially with respect to purchasing car bodies in the Miami area. The United States has identified at least 1,271 victims of the conspiracy.
Under U.S.S.G. §3B1.1(b), in distinguishing a leadership/organizational role from one of mere management or supervision, Application Note 4 provides:
Factors the court should consider include the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others. There can, of course, be more than one person who qualifies as a leader or organizer of a criminal association or conspiracy.
U.S.S.G. §3B1.1, Application Note 4.
Paragraph 36 of the PSI prepared by the USPO lays out the facts supporting Giordano's leadership/organizer role. PSI (Giordano, Jr.) ¶ 36. The evidence adduced at trial overwhelmingly proved Giordano, Jr. was the leader/organizer of the conspiracy on the Atlas-end. Giordano, Jr. was the president and chief executive officer of Atlas. His authority to make scrap buying decisions on behalf of the company was unquestioned. The evidence conclusively showed he was the key Atlas participant at the Sea Ranch meeting, where the collusive deal was struck. It is uncontroverted that he did most of the talking for Atlas at this meeting. The deal struck was a comprehensive agreement covering specific suppliers, specific geographic areas, and specific grades of scrap. This collusive deal -- between the two dominant shredders in the Miami area -- covered nearly every conceivable piece of scrap purchased by Atlas and Sunshine throughout southern Florida. The evidence showed Giordano, Jr. flew down from Cleveland to participate in the Sea Ranch meeting, then flew back to Cleveland after the collusive deal was struck.
Importantly, Giordano, Jr. recruited his chief car buyer, Sheila McConnell, to participate in the conspiracy -- against her will. Not only did he recruit McConnell, Giordano, Jr. also directed her. Giordano, Jr. requested that McConnell participate in the Sea Ranch meeting, and he instructed her to take notes relating to the comprehensive agreement while the meeting was going on. Giordano, Jr. received faxes and communications relating to the collusive agreement, which he then used to monitor its progress. He also supervised the conspiracy through telephone communications with David Giordano (the manager of the Miami facility) and Sheila McConnell, trying to ensure that she followed the agreement. For example, on one occasion when McConnell told Giordano, Jr. she did not drop all of her prices because Weil had not done so, Giordano, Jr. insisted that she drop the prices immediately. During the conspiracy, Giordano, Jr. fielded complaints from his co-conspirator, Randolph Weil, which he passed along to McConnell.
Giordano, Jr. also was the key participant in the conspiratorial meeting at Don Shula's restaurant, where he accused his co-conspirator, Randolph Weil, of not following the collusive agreement. After the meeting at Don Shula's restaurant, Giordano, Jr. exercised even more control over McConnell's buying of scrap. In addition to his leadership participation in the Sea Ranch and Shula's meetings, Giordano, Jr. was the leading Atlas participant in the two preliminary meetings which led to the collusive deal struck at Sea Ranch, one at Charcoal's restaurant and the other at a restaurant called Casa D'Oro.
Accordingly, there is ample evidence in the record to support the USPO's position that the conduct of Giordano, Jr. merits a four-level enhancement for his role in the criminal activity. PSI (Giordano, Jr.), ¶ 36. The United States recommends that the four-level enhancement be applied to Giordano, Jr. -- he clearly was the leader/organizer of the conspiracy on the Atlas-end.
The United States recommends that, in addition to his criminal fine, a jail sentence of 24 months be imposed on Giordano, Jr., the top-end of his range pursuant to a Total Offense Level of 15, as explained more fully in paragraph 64.
Paragraph 41: The United States does not understand this objection. Based on the business records provided by Atlas and admitted into evidence at trial, the United States has counted at least 1,271 different victims of the conspiracy. These victims are comprised of suppliers who made sales to Atlas during the conspiracy period. Though it is true some of these victims cannot be located, it is true that Atlas' records show they were victimized by the conspiracy, since they sold to Atlas scrap that was subject to the illegal agreement reached at Sea Ranch.
Paragraph 60: The one-point enhancement for volume of commerce is appropriate. The volume of commerce attributable to Giordano, Jr. is $614,436.39. Pursuant to U.S.S.G. §2R1.1(b)(2), a one-point enhancement should be added to Giordano, Jr.'s base offense level of 10.
Paragraph 62: For the reasons stated above in Paragraph 36, Giordano, Jr. clearly merits a four-level enhancement for his role as a leader/organizer of the criminal activity. The United States agrees the four-level enhancement is appropriate based on the USPO's statements in paragraph 36 of its PSI.
Paragraph 64: For the reasons provided above in Paragraphs 36, 60 and 62, the USPO is correct in concluding the maximum Adjusted Offense Level (subtotal) is 15. The United States recommends that a jail sentence be imposed at the top-end of the sentencing range applicable to Giordano, Jr. -- 24 months. The United States intends to submit a sentencing recommendation setting forth its reasons for the sentence and will be prepared to discussed these reasons fully at the sentencing hearing. Among other things, sentencing factors include (1) the collusive agreement was entered into on the heels of a tragic event (Hurricane Andrew) and was designed unfairly to take full advantage of other people's misfortune; (2) the history of collusive conduct (in Cleveland) in which Giordano, Jr. has been involved; (3) statements made by Giordano, Jr. denying his involvement in the agreement, including the attempted introduction of bogus polygraph tests; and (4) his role in the offense, including forcing a participant to join the conspiracy against her will.
Paragraph 66: There is no basis for a downward departure of two levels for Giordano, Jr. Like the USPO, the United States apparently will have to wait for a "subsequent submission" before knowing the basis for the requested departure.
PART C. OFFENDER CHARACTERISTICS
Financial Condition: Ability to Pay
Paragraph 86: The United States does not have sufficient financial information to assess Giordano, Jr.'s objection to this paragraph. The criminal fine to be paid by Giordano, Jr., however, is not large. Pursuant to U.S.S.G. §2R1.1(c)(1), a special instruction, the range of his criminal fine is between one to five percent of the volume of commerce, but not less than $20,000. The volume of commerce is $614,436.39. The fine range is thus between $6144.36 and $30,721.82. Accordingly, under the Guidelines Giordano, Jr.'s criminal fine must be at least $20,000, but cannot be more than $30,721.82. Surely, he can pay this criminal fine, if not all up front, then over time by installment with interest applied. Installment payments may also be made with respect to any restitution that may apply to Giordano, Jr.'s sentence.
Paragraph 95: The United States has no information to confirm or dispute this objection. For the reasons stated above in paragraph 86, Giordano, Jr. surely can pay the criminal fine to be imposed in this case.
Paragraph 97: The United States does not understand this objection. Giordano, Jr.'s ability to pay a fine is dependent on the amount of the fine, his income and his assets. The defendant may also be able to pay his fine in installment payments. Moreover, as explained above, Giordano, Jr. should be able to afford the criminal fine, regardless of the continued viability of Atlas. If Atlas were to fold, he would simply have to do what other folks have to do who do not own a company -- get a job. Or he can liquidate certain assets to come up with the money. Or he can reduce his expenses, which, based on the USPO's report, contain a lot of fat. Moreover, as an owner of Atlas, it is not necessarily true that he has to remain as president and chief executive officer to continue to derive money from the company. As an owner, a distribution can be made to him by the company outside of his being a salaried officer.
PART D. SENTENCING OPTIONS
Paragraph 99: The position of the USPO and the United States is that the Total Offense Level is 15, not 10. His range is thus 18 to 24 months under the Sentencing Table. He does not qualify for sentencing under U.S.S.G. §5C1.1(c)(2) or (3).
Paragraph 104: The United States disagrees with this objection insofar as the defendant suggests a criminal fine under 18 U.S.C. § 3571(d) is inappropriate as a matter of law in this case. (Giordano, Jr. inadvertently refers to it as 18 U.S.C. § 3371(d).) The United States, however, does not intend to use this alternative fine provision against Giordano, Jr.
Paragraph 105: This objection is wrong. The individual defendant's fine in this case -- as in all antitrust cases -- is governed by U.S.S.G. §2R1.1(d). Pursuant to U.S.S.G. §5E1.2(b), a special instruction provided for in Chapter Two takes precedence over the provisions set forth in U.S.S.G. §5E1.2(c). Thus, Giordano, Jr. must pay a criminal fine of at least $20,000. The United States recommends that a criminal fine at the top end of the range (5 percent of $614,436.39) be imposed. Accordingly, the United States recommends a criminal fine of $30,721.82 be imposed on Giordano, Jr.
Paragraph 108: This objection is groundless. There is no basis to support a downward departure for Giordano, Jr.
For the reasons stated above, Atlas' objections are not well taken. The United States will submit a sentencing recommendation prior to the hearing.
1. U.S.S.G. §1B1.3, Application Note 1, states: "The principles and limits of sentencing accountability under this guideline are not always the same as the principles and limits of criminal liability. Under subsections (a)(1) and (a)(2), the focus is on the specific acts and omissions for which the defendant is to be held accountable in determining the applicable guideline range, rather than on whether the defendant is criminally liable for an offense as a principal, accomplice, or conspirator."
2. For example, Atlas did not classify its scrap as "appliances," "unprepared #2," "prepared #2," "prepared #1."
3. For sentencing purposes, the figures used by the United States in calculating the volume of commerce attributable to Atlas (and Giordano, Jr.) are the actual dollar amounts paid by Atlas to its suppliers of scrap. These actual amounts represent the true amount of the volume of commerce affected by the conspiracy. Pursuant to U.S.S.G. §2R1.1, all scrap purchases made by Atlas affected by the conspiracy should be included as volume of commerce attributable to Giordano, Jr. for sentencing purposes. See, e.g., United States v. Hayter Oil Co., Inc., 51 F.3d 1265 (6th Cir. 1995); United States v. Michael D. Andreas, et al., 1999 WL 51806 (N.D. Ill.).
4. Furthermore, according to the trial testimony, the agreed-upon prices represented "delivered" prices, i.e., it was assumed that if the conspirators picked up the scrap, the cost of the freight would be deducted from the agreed-upon price. McConnell testified that she did not want to go along with the conspiracy so, whenever Atlas picked up scrap, McConnell did not further reduce the price Atlas paid by deducting freight costs. She did not do so because she wanted to cheat on the agreement to ensure supply to Atlas. Because this is a buy-side conspiracy, her cheating actually increased the dollar volume of commerce affected by the conspiracy and attributable to Atlas and Giordano, Jr. Giordano, Jr. should not now be allowed for sentencing purposes to decrease his volume of commerce to offset the fact that, during the conspiracy, Atlas' cheating increased the volume of commerce.
5. In making its determination that the criminal conduct here was "otherwise extensive," the court must look at the totality of circumstances, including, among other factors, the number of participants, width, breadth, scope, complexity, and duration of the conspiracy. See, e.g., United States v. Holland, 22 F.3d 1040, 1046 (11th Cir. 1994) (length and scope of conspiracy, as well as number of participants, to be considered in determining "otherwise extensive" nature of conspiracy); United States v. D'Andrea, 107 F.3d 949, 957 (1st Cir. 1997) (factors include width, breadth, scope, complexity, duration and number of participants); United States v. Dale, 991 F.2d 819, 857 (D.C.Cir. 1993), cert denied, 510 U.S. 906 (1993), (factors include wide geographic scope and extensiveness of the actions taken to further the conspiracy).
6. Of course, the duration of a conspiracy is not controlling. For example, in United States v. Reid, 911 F.2d 1456, 1465 (10th Cir. 1990), cert denied, 498 U.S. 1097 (1991), the court upheld an enhancement under U.S.S.G. §3B1.1(a) for "otherwise extensive" conduct in a conspiracy lasting only three weeks.