The opinion of the court was delivered by: FRIEDMAN
This case came before the Court on August 21, 1995, for an evidentiary hearing to determine the application of the United States Sentencing Guidelines in the sentencing of Martin Miller.
Martin Miller is a real estate developer and managing partner of several District of Columbia real estate ventures. Beginning in 1986, Mr. Miller entered into a series of partnership agreements with several other individuals to create five real estate partnerships: 2414 Douglas Street Ltd., 2221 Adams Place Associates, 5th Street Venture, 2215 5th Street Association ("Intown"), and Lamont Street Associates. In his capacity as managing partner of these five ventures, from 1990 through 1993 Mr. Miller transferred monies without authorization from these "victim" partnerships to other unrelated partnerships in which he had an interest. He also caused checks to be written from victim partnership bank accounts to himself personally and to his company, Martin Miller Properties, Inc. ("MMP"). He also failed to pay property taxes on several of the properties while representing to the other partners that taxes had been paid. Mr. Miller pled guilty to one count of wire fraud in violation of 18 U.S.C. § 1343 for faxing a falsified bank statement which he used to deceive the other partners about the financial condition of the victim partnerships.
For three days, from August 21 to August 23, 1995, this Court held an evidentiary hearing to resolve two disputed issues raised by the applicable sentencing guidelines, to wit, the amount of loss to the victim partnerships attributable to Mr. Miller's actions, U.S.S.G. § 2F1.1(b)(1), and whether Mr. Miller abused a position of trust. U.S.S.G. § 3B1.3.
The Presentence Investigation Report prepared by the United States Probation Office calculated the following under the Sentencing Guidelines: a base offense level for fraud of six; an amount of loss of $ 388,688 which increases the offense level by nine; a two-level enhancement for more than minimal planning; a two-level enhancement for abuse of a position of trust; and a three-level reduction for acceptance of responsibility, for a total offense level of 16.
See U.S.S.G §§ 2F1.1, 3B1.3, 3E1.1 The government subsequently submitted an amount of loss of $ 358,952 which also carries a 9-level enhancement.
During the hearing, the government called as witnesses FBI Special Agent David Riser and, on rebuttal, Armond Spikell, a general partner in all five victim partnerships. The defense called Martin Miller and Herbert Ritter, a former employee of Martin Miller Properties. Mr. Ritter is currently employed by Meredith Olson who is a general partner in the victim partnerships. Defendant also called Richard Champion, a certified public accountant and expert witness.
The hearing focused on the amount of loss and the underlying issues of contractual interpretation. The parties agreed that Mr. Miller was entitled to a management fee of three percent of collected rents from each of the victim partnerships except Lamont Street; they disagreed as to whether he was entitled to expenses beyond that. Defendant conceded that he transferred monies and that checks were written to him personally and to his company without authority, and there was no dispute over the total amount that Mr. Miller took. Tr. at 6. Defendant contended, however, that the written partnership agreements authorized the reimbursement of his and his company's expenses, including overhead, in managing the partnerships and that these expenses should be deducted from the total amount of loss. The government countered that while the partnership agreements provide for the reimbursement of out-of-pocket expenses, these were not intended to include many of the overhead items claimed by Mr. Miller. It argued that the money he took or was owed for those costs properly belongs in the total amount of loss.
The parties offered in evidence the partnership agreements, a letter sent by Mr. Miller, partnership expense statements prepared by Mr. Miller's office and cancelled checks. There was testimony about these documents and about a meeting of the partners at which expenses were discussed.
A. The Partnership Agreements
On their face, all five partnership agreements permit the general partners to be reimbursed for expenses. Each agreement contains the following provisions:
10.3 The General Partners shall have the following powers on behalf of the partnership . . .
(h) To employ any one or more persons . . . to manage Partnership property, and in all such events to pay reasonable compensation for such services.
(o) To make any and all expenditures which the General Partners, in its [sic] sole discretion, shall deem necessary or appropriate in connection with the management of the affairs of the Partnership . . . including, without limitation, all legal, accounting and other related expenses incurred ...