Amy Kuhner sentencing memo

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UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

UNITED STATES OF AMERICA :

vs. : CRIMINAL NO. 3:12CR168(AWT)

AMY KUHNER : January 2, 2013

REPLY TO GOVERNMENTS SENTENCING MEMORANDUM

Introduction

The government, seeking a sentence based largely upon its Guidelines loss calculation of

between $256,000 and $671,916, Governments Memorandum in Aid of Sentencing (Gov. Mem.) at

16, errs fundamentally in two ways: by treating pre-offense salary payments as Guidelines loss and by

ascribing criminal intent to, and by defining as criminal, grant expenditures for salary by Amy Kuhner.

In essence, the government, and through it the Health Resources Services Administration (HRSA),

attempt to expand the scope of this sentencing proceeding and shift its focus from a false statement

offense to a theft or fraud case and to a civil recoupment action. See Gov. Mem. at 13 (According to

HRSA, their actual loss is $671,916, which is the amount of money HRSA would disallow under the

grant and seek to recoup .).On July 27, 2007 Amy Kuhner made a false statement to HRSA regarding the expenditure of

grant funds and she admitted that when she pled guilty. The government concedes she did not admit

to possessing an intent to defraud at the time she drew down the grant funds. Gov. Mem. at 14.

Moreover, the government fails to establish any basis that might make the earlier draws relevant

conduct or loss caused by the false statement. Instead, the government makes a huge and unfounded

leap in inferring from the 2007 false statement that Ms. Kuhner engaged in a course of criminal conduct

and acted criminally in drawing funds that were used for her salary and benefits.

As it must on this record, the government grudgingly admits that its calculated Guidelines ranges

may slightly overstate the severity of this particular offense insofar as Amy Kuhner never set out to

defraud HRSA through falsehoods, did not finance an extravagant lifestyle, has already suffered the

humbling and punitive effect of public disapprobation, and has engaged in a period of profound

reflection. Gov. Mem. at 20.

Case 3:12-cr-00168-AWT Document 24 Filed 01/02/13 Page 1 of 7


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The government overreaches, however, in trying to tar Ms. Kuhner by speculating that she

appears to have been motivated by the same mixture of self-righteous entitlement that motivates other

white collar criminals to engage in various crimes rationalized by some sense of personal injustice.

Gov. Mem. at 19. That Amy Kuhner committed the deeply regretted offense of making a false

statement in 2007 should not diminish her genuine devotion to making Sunshine House a reality, it did

not cause the project to fail, and it did not, in Sentencing Guidelines parlance, cause financial loss that

can be used to measure the seriousness of the offense of conviction. Amy Kuhner submits this

memorandum to assist the Court in better appreciating the nature of the offense and in considering the

relevant facts and law in fashioning an appropriate sentence in this unusual and unfortunate case.

Discussion

1. Loss Calculation Under the Sentencing Guidelines

The government misunderstands the defendants argument that Guidelines loss, defined either

as intended or caused by a defendant, does not apply where the offense itself post-dates the claimed

financial loss. It comments that Kuhner provides no support for her claim that conduct predating the

actual false statement cannot be considered as relevant conduct under 1B1.3 of the Guidelines. Gov.

Mem. at 14. The concept of relevant conduct defined by the Sentencing Guidelines may include

conduct predating an offense of conviction. The flaw here with the loss calculations in the Presentence

Report and those asserted by the government arises from the definitions of loss under the Guideline,

not from the concept of relevant conduct.

The Introductory Commentary to U.S.S.G. 2B1.1 advises that [t]hese sections address basic

forms of property offenses[.] The base offense level for making a false statement, which may but need

not be a property offense, is six. The base may be increased for a number of specific offense

characteristics, including loss. As explained by the Sentencing Commission;

The Commission has determined that, ordinarily, the sentences of defendants convictedof federal offenses should reflect the nature and magnitude of the loss caused orintended by their crimes. Accordingly, along with other relevant factors under theguidelines, loss serves as a measure of the seriousness of the offense and the defendantsrelative culpability and is a principal factor in determining the offense level under thisguideline.

U.S.S.G. 2B1.1, Background (emphasis added).



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The core concept of loss caused or intended by [a defendants] crimes is embodied in the two

alternative definitions of loss for offenses covered by this section of the Guidelines. The first, actual

loss, means the reasonably foreseeable pecuniary harm that resulted from the offense. U.S.S.G.

2B1.1, App. Note 3(A)(i)(emphasis added). The alternate of intended loss [I] means the pecuniary

harm that was intended to result from the offense; and (II) includes intended pecuniary harm that would

have been impossible or unlikely to occur[.] U.S.S.G. 2B1.1, App. Note 3(A)(ii)(emphasis added).

Finally, reasonably foreseeable pecuniary harm is defined to be pecuniary harm that the defendant

knew, or under the circumstances, reasonably should have known, was a potential result of the offense.

U.S.S.G. 2B1.1, App. Note 3(A)(iv)(emphasis added).

What the underscored language clarifies is that, fundamentally, loss is harm that occurs from

or is intended to occur from the offense. The first definition addresses loss that resulted from the

offense if it was reasonably foreseeable, which in turn speaks of a potential result of the offense.

Similarly, the alternative measure of intended loss also speaks to what was intended to result from

the offense.

Both measures of loss, by definition, look forward from the offense and quantify what resulted

(if it was reasonably foreseeable) or what was intended to result from the offense. In short, the

defendant has provided sound support for her position that the Presentence Report and the government

loss calculations are wrong: the controlling language of the Sentencing Guidelines.

2. The False Statement Did Not Cause Loss

The government goes to great lengths, reviewing the history of the Sunshine House project, in

an attempt to show that Amy Kuhner took salary from the federal grant funds in violation of the terms

of the grant. All of that occurred before the false statement and, even if the salary was not a permitted

grant expense, it cannot be said to have resulted from the false statement of how funds had been spent.

Thus, it is irrelevant for purposes of calculating the Guidelines offense level. Moreover, what the

government has argued was an obvious limitation on how grant funds could be used was not so readily

clear.



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From the outset it did not appear that a strict reading of the grant application and approval

process was required by HRSA. In 2001 Sunshine House applied for and received from HRSA a grant

in the amount of $836,190. Gov. Mem. at 2-4. The grant was given for construction purposes. Gov.

Mem. at 4 and A21-38. When it applied for a construction grant, however, Sunshine House submitted

documents which 1) estimated total project costs of $7,806,250, including $1,000,000 to purchase land

for the buildings, 2) disclosed that it had income of less than $70,000 for 1999 and for 2000, 3)

disclosed that it operated at a loss for those two years and ended each year with less than $25,000 cash

on hand, and 4) characterized its source of funding to finance the project beyond the federal grant as

other without explanation. Gov. Mem at 3-4, A13, 16-17. The terms of the grant called for

completion in three years. Gov. Mem. at A24. The Specifics of Grant issued by HRSA

acknowledged that the construction site was To be determined. Gov. Mem. at A27. Given the

massive undertaking Sunshine House was planning, it was not reasonably foreseeable in 2001, when

the grant was awarded, to expect that Sunshine House, with its minimal income and meager assets,

could even enter a construction contract let alone break ground or complete construction within the time

frame of the grant. In fact, a tremendous amount of time and effort was dedicated, necessarily, to

finding a site for the project and for developing detailed designs for the project. Ultimately, nearly five

years, HRSA later revised the grant to design only. Gov. Mem. at 4.

Long before HRSA issued the grant, the Sunshine House board of trustees had authorized a

salary for Ms. Kuhner as executive director. When funds were unavailable, the balance of salary unpaid

was accrued. Over the years, the trustees authorized salary increases. Although the grant was awarded

on September 13, 2001, PSR 9, funds were not drawn down for two years. PSR 10. In July of 2003

Ms. Kuhner was called by an HRSA official who noted that no grant funds had been used, asked if there

had been any expenses and advised that funds should be used or they would be lost. In response,

Ms. Kuhner reviewed the Grant Program Guide and saw that salary of applicants staff was identified

as permitted expense under several categories. See Exhibit A. Based on that reading, possibly

erroneous but certainly not wrongful in the sense of being fraudulent or intentionally wrongful, starting



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about September 23, 2003, grant funds were drawn down and used to pay various project costs,

including Ms. Kuhners salary, both current and accrued. In short, what the government argues was

clearly unauthorized by the grant was simply not so understood by Ms. Kuhner.

HRSA asserts that $671,916, which was primarily used to pay the Executive Directors salary

and benefits, is considered unallowable because reimbursement of these costs was not the intended

purpose of the grant. Gov. Mem. at A53. Until it revised the purpose of the grant on August 24, 2006,

the purpose of the grant was construction, a purpose which, as discussed above, should have been

understood even by HRSA as unattainable within the grant period. While executive director salary may

now be considered unallowable by HRSA, it was not taken with that understanding. Moreover, the

pronouncement in 2012 by HRSA that it is considered unallowable does not retroactively establish

that Ms. Kuhner knew or even should have known that drawing down funds to pay a board of trustees

authorized salary was wrongful. And, again to emphasize a fundamental point, what may now be

deemed unallowable was not in any way caused by or intended by the false statement made by

Ms. Kuhner in 2007.

The governments fall back loss argument, that Ms. Kuhner violated the grant by drawing down

funds totaling $256,000 in 2006 before Sunshine House accrued those expenses, likewise fails. As

discussed above, under U.S.S.G. 2B1.1, loss requires a nexus to an earlier offense of conviction. And

again, violation of the conditions of the grant does not make the action wrongful in a criminal sense.

Throughout and beyond the grant period, Amy Kuhner tried to make the project succeed. She may have

misinterpreted the terms of the grant, but her intent was to further the purpose of the grant and she did

not act with an improper motive or intent in using grant funds. What she was charged with and pled

guilty to was the making of a false statement after the grant funds had been spent about how they had

been spent. That criminal act does not, however, taint her earlier use of grant funds. The government

argues that [n]o doubt that Kuhner foresaw that if she told HRSA the truth, HRSA would at the very

least seek to recoup the funds [and] [t]he false statements were designed to hide HRSAs loss from the

agency. Gov. Mem. at 13. Even if this assessment of Ms. Kuhners foresight is correct, her false

statement did not cause loss that is cognizable under the Guidelines.



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Conclusion

When Amy Kuhner committed the offense that brings her before the Court for sentencing, she

acted foolishly and criminally. With sound judgment or good advice, she would have simply described

how the grant funds had been used. Her false statement of how the funds were spent was not, however,

akin to what the government characterizes as the same mixture of self-righteous entitlement that

motivates other white collar criminals[.] Amy Kuhners life before the Sunshine House project, during

it and since negates that facile and flawed suggestion. See Exhibits attached to Defendants

Memorandum in Aid of Sentencing. A far more insightful assessment is offered by a retired social

worker who knew Ms. Kuhner from the inception of the Sunshine House project:

Amys vision for Sunshine House grew slowly, but she had almost a missionary driveto put together the necessary documents, funding, and supporters to accomplish thismission. However, at each significant point in the process, she had roadblocks whichinterfered with her ability to go ahead. When she received a grant to help her with theestablishment of Sunshine House, she was primarily in charge, and did not fully utilizeavailable help. We talked frequently about her work which encompassed 100% of herlife. In retrospect now, she took on too much without proper guidance and is wishingnow she had not done so much on her own, which was a mistake.

Letter of Irmgard R. Wessel, LCSW, Exhibit A to Defendants Memorandum in Aid of Sentencing.

For all the reasons stated above and upon the entire record, in this non-heartland case we urge

the Court to impose a non-custodial sentence upon this unique and extraordinary defendant.

Respectfully submitted,

THE DEFENDANT,AMY KUHNER

FEDERAL DEFENDER OFFICE

Dated: January 2, 2013 /s/ Paul F. Thomas

Paul F. ThomasAssistant Federal Defender265 Church Street, Suite 702New Haven, CT 06510Phone: (203) 498-4200Bar no.: ct01724Email:[email protected]

mailto:[email protected]:[email protected]:[email protected]


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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on January 2, 2013, a copy of the foregoing Reply to GovernmentsSentencing Memorandum was filed electronically and served by mail on anyone unable to acceptelectronic filing. Notice of this filing will be sent to all parties by operation of the Courts electronicfiling system or by mail to anyone unable to accept electronic filing as indicated on the Notice ofElectronic Filing. Parties may access this filing through the Courts CM/ECF System.

/s/ Paul F. ThomasPaul F. Thomas



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Case 3:12-cr-00168-AWT Document 24-1 Filed 01/02/13 Page 1 of 5


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Amy Kuhner sentencing memo

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