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United States v. Nygren

United States District Court, D. Maine

April 10, 2018




         Steven Nygren pleaded guilty to sixty-three counts of bank fraud, one count of using an unauthorized access device, and one count of tax evasion. The Government and Mr. Nygren raise a series of sentencing issues. The Court concludes:

1. Mr. Nygren employed sophisticated means in the course of his tax evasion pursuant to U.S.S.G. § 2T1.1(b)(2) but not his fraud pursuant to § 2B1.1(b)(10)(C).
2. Mr. Nygren did not further the execution or concealment of his fraud activities through the abuse of a position of trust pursuant to § 3B1.3.
3. Mr. Nygren attempted to obstruct justice pursuant to § 3C1.1 by malingering during competency evaluations.
4. Mr. Nygren is not entitled to a reduction in offense level for acceptance of responsibility pursuant to § 3E1.1.
5. Mr. Nygren's criminal history is not substantially underrepresented by the guideline calculation pursuant to § 4A1.3(a)(2)(E).[1]

         I. BACKGROUND

         A. Procedural History

         On September 16, 2015, Mr. Nygren was arrested by the Maine State Police and charged with related state offenses. Presentence Investigation Report ¶ 1 (PSR). He was released on bail on September 23, 2015. Id.

         On April 9, 2016, Mr. Nygren suffered a stroke and was hospitalized. Def. Ex. 1 (Massachusetts General Hospital Records). On April 22, Mr. Nygren had surgery to create a shunt in order to relieve pressure in his head. Id. On April 26, 2016, he was discharged for rehabilitation. Id.; See also Def. Ex. 1 (Spaulding Rehabilitation Hospital Records). Although Mr. Nygren made progress in his recovery, in July 2016, the Defendant's primary treating neurologist, Dr. Alvin Das, M.D., opined that the Defendant experienced significant cognitive impairment as a result of the stroke. Mot. to Determine Competency and Exclude Time Under the Speedy Trial Act Attach 1 (ECF No. 20).

         On August 10, 2016, a federal grand jury returned an indictment charging Mr. Nygren with sixty-three counts of bank fraud, one count of unauthorized use of an access device, and one count of tax evasion. Indictment (ECF No. 1). On August 25, 2016, Mr. Nygren appeared before the Magistrate Judge and was released pursuant to a $15, 000 unsecured bond. Min. Entry (ECF No. 9). On August 30, 2016, the arraignment was continued for sixty days until October 24, 2016 to allow defense counsel to review medical records and prepare an expert witness on competency. Notice of Hr'g (ECF No. 13). On October 18, 2016, defense counsel moved to continue the arraignment to allow more time to review Mr. Nygren's neuropsychological evaluations in order to determine his competency. Opposed Mot. to Continue Initial Appearance/Arraignment (ECF No. 14). The Magistrate Judge denied the motion, indicating that defense counsel should file a motion for a competency hearing. Order (ECF No. 16). The arraignment went forward and Mr. Nygren pleaded not guilty to all counts on October 24, 2016. Min. Entry (ECF No. 17).

         On November 7, 2016 Mr. Nygren filed a motion for a competency hearing and submitted an October 15, 2016 psychiatric evaluation from Dr. Peter Donnelly, Psy. D., expressing doubts about Mr. Nygren's ability to assist in his own defense. Mot. to Determine Competency and Exclude Time Under the Speedy Trial Act Attach 2 Forensic Evaluation (ECF No. 20) (First Donnelly Report). On January 11, 2017, the Government filed a motion for a psychiatric exam. Mot. for Psychiatric Evaluation (ECF No. 35). On January 12, 2017, the Court issued an order for an evaluation of Mr. Nygren's competency to stand trial. Order (ECF No. 36).

         On February 21, 2017, Mr. Nygren reported to Federal Medical Center Devens for the evaluation. PSR ¶ 2. He was released on March 23, 2017. Id. The Court received the psychological report from the Bureau of Prisons evaluator, Dr. Miriam Kissin, Psy. D., on May 12, 2017 and received a supplemental report from Dr. Donnelly on June 19, 2017. Forensic Report (ECF No. 39) (Kissin Report); Forensic Evaluation (ECF No. 46) (Second Donnelly Report). Dr. Kissin found that Mr. Nygren was exaggerating his reported memory problems and concluded that his current functioning was not consistent with any significant cognitive deficits. Kissin Report at 23-24. Dr. Donnelly also concluded that Mr. Nygren was competent. Second Donnelly Report at 3-4.

         The Court scheduled a competency hearing for June 20, 2017. Notice of Hr'g (ECF No. 40). At the hearing, Mr. Nygren no longer contested his competency. The Court received evidence, including two forensic reports and medical records from Spaulding Rehabilitation Hospital, and the Court found him competent to stand trial. Min. Entry (ECF No. 47); Ct. Ex. List (ECF No. 48). Immediately after this conclusion, Mr. Nygren pleaded guilty to all sixty-five counts. Id.

         On October 19, 2017, the Government filed its sentencing memorandum. Gov't's Sentencing Mem. (ECF No. 51) (Gov't's Mem.). On November 20, 2017, Mr. Nygren filed his response to the Government's sentencing memorandum. Def.'s Resp. to Gov't's Sentencing Mem. (ECF No. 59) (Def.'s Opp'n). The Government filed its reply on December 4, 2017. Gov't's Reply to Def.'s Sentencing Mem. (ECF No. 60) (Gov't's Reply).[2]

         B. Tax Evasion Conduct

         Mr. Nygren has been in collection with the IRS since at least 2005 for outstanding taxes, penalties, and interest he owed the United States for seven of the years from 1996 through 2009. Prosecution Version of the Offense at 4 (ECF No. 45). To defeat the IRS's ability to collect his outstanding tax debt, Mr. Nygren engaged in a course of conduct to disguise his income and his control of assets. Id. He used a false social security number on an employment form, had an employer wire compensation into accounts under his wife's name, and directed an employer to treat him as an independent contractor, not an employee. Id. at 4. Mr. Nygren also directed another individual, a relative, to open a bank account in Massachusetts for his use, and he created and operated an LLC in the relative's name for a business venture - the Brooklin General Store. Id. at 5.

         C. Fraud Conduct

         In 2013, Mr. Nygren performed consulting work for Brooklin Boat Yard (BBY) in Maine. Id. at 1. In June 2014, BBY hired Mr. Nygren as Financial Manager or Chief Financial Officer. Id. His duties included maintenance of accurate financial records and controls, as well as reporting the company's financial status to ownership. Id. Mr. Nygren wrote sixty-three unauthorized checks from BBY's operating account at Camden National Bank to “Continuum”, his consulting business. Id. at 1-2. Mr. Nygren forged the signatures of two other BBY officers and deposited the checks into the Massachusetts bank account his relative had opened for him. Id. The amounts on the checks totaled more than $732, 000. Id. at 1. Mr. Nygren also used two company credit card numbers without authorization, totaling roughly an additional $83, 000. Id. at 3; PSR ¶ 9. Mr. Nygren used nearly all of the stolen funds for personal expenses. Id. at 2. Nearly half of the money funded Mr. Nygren's purchase and operation of the Brooklin General Store, and he used roughly $70, 000 to pay for his daughter's wedding. Id.


         The Probation Office (PO) determined that the base offense level for the tax fraud count group is twenty, which is increased two levels for failing to report proceeds of criminal activities. PSR ¶¶ 34-35. The PO recommended applying the two-level sophisticated means enhancement to the tax fraud count. PSR ¶ 36.

         Regarding the fraud count group, the PO determined that the base offense level is seven, which is increased fourteen levels for the amount of loss. PSR ¶¶ 27-28. The PO recommended against applying the two-level sophisticated means enhancement to the fraud counts, PSR ¶ 29, but did recommend applying the two-level enhancement for abuse of a position of trust. PSR ¶ 31.

         The PO recommended applying the two-level enhancement for obstruction of justice to both count groups because there is evidence that Mr. Nygren was malingering in order to delay or avoid punishment. PSR ¶¶ 19-22; 32, 39. The PO also recommended against applying the two or three-level reduction under U.S.S.G. § 3E1.1 for acceptance of responsibility. PSR ¶¶ 23-24.

         The PO determined that Mr. Nygren's combined total offense level is twenty-eight. PSR ¶ 47.

         The PO concluded that Mr. Nygren's criminal history category is II. PSR ¶ 52.

         Mr. Nygren received one criminal history point for a February 3, 2014 Massachusetts conviction for larceny less than $250 and two additional points because he committed the instant offenses while under probation for that crime. PSR ¶¶ 50-51.


         A. Sophisticated Means

         1. The Government's Memorandum

         The Government argues that Mr. Nygren's conduct “fall[s] within the heartland of the sophisticated means by the use of various identities, tax identification numbers, and the movement of funds between jurisdictions.” Gov't's Mem. at 5. The Government suggests that the tax evasion conduct was sophisticated because he used a false social security number as well as bank accounts and a corporate entity in a relative's name to hide his assets. Id. at 7.

         The Government contends Mr. Nygren's fraud was sophisticated because using an out-of-state bank account associated with a corporate identity meant that “the payments were less obviously fraudulent than they would have been if he had made the checks payable to himself. . . .” Id. at 6. The Government asserts that using a relative to open bank accounts shows sophistication and “a high level of planning aimed at avoiding detection, and thus effecting perpetuation of the scheme.” Id. The Government also insists that Mr. Nygren used a “fictitious” or “shell” corporate entity by employing a defunct Massachusetts corporation, Continuum. Id. at 7-8.

         2. Mr. Nygren's Response

         Mr. Nygren argues that all acts of tax evasion involve some degree of concealment and that not all acts of tax evasion involve sophisticated means. Def.'s Opp'n at 7. He distinguishes cases cited by the Government where defendants used a series of false social security numbers and identification cards and received a sophisticated means enhancement. Id. Mr. Nygren argues that his acts of evasion and fraud were not more sophisticated than other acts of tax evasion and bank fraud. Id.

         Regarding the fraud, Mr. Nygren argues that he did not use any fictitious or shell corporations, rather he used the name of his actual preexisting consulting corporation which was only technically “defunct” because he had simply failed to pay state renewal fees. Id. at 5, 8. Mr. Nygren points out that he used the name of his consulting business, Continuum, on the forged checks, which was known to the other BBY officials and could hardly have concealed his involvement. Id. at 4.

         3. The Government's Reply

         The Government replies that Mr. Nygren's use of the real Continuum name that was known to BBY management could very well have aided in the concealment of the fraudulent nature of the checks because if other managers happened to see a record of one of those transactions Mr. Nygren would have been able to represent those expenditures as legitimate. Gov't's Reply at 2. The Government also contends that the “relativity” test that Mr. Nygren advocates - a comparison to the level of sophistication of typical comparable crimes of the same type - is not valid under First Circuit law. Id. at 4.

         B. Abuse of a Position of Trust

         1. The Government's Memorandum

         The Government claims that Mr. Nygren abused a position of trust because he helped draft the job description for his position and he knew that it was his job alone to monitor and manage cash flow and reconcile accounts. Gov't's Mem. at 10-11. The Government emphasizes that if anyone else had held his position and he had held a different one, his fraud would have been discovered immediately after the first forgeries. Id. at 11. The Government also suggests that the owners of BBY placed extraordinary trust in Mr. Nygren because he had worked for the business before and delivered positive results. Id. at 12.

         2. Mr. Nygren's Response

         Mr. Nygren does not dispute that he held a position of trust with BBY and its owner. Def.'s Opp'n at 9. Instead, he argues his position did not enable him to commit or conceal the offense. Id. Mr. Nygren contends that his position did not enable his fraud because he had no check writing authority. Id. at 9-10. He asserts that his job duties were ill-defined and he lacked the requisite discretion for the enhancement because there were other officials responsible for monitoring the accounts. Id. at 10-11.

         3. The Government's Reply

         The Government replies that Mr. Nygren's position enabled him to perpetuate his fraud because he “was the watcher” and was well positioned to know what the other managers did and did not do regarding the monitoring of their financial accounts and records. Gov't's Reply at 5.

         C. Obstruction of Justice

         1. The Government's Memorandum

         The Government asserts that Mr. Nygren attempted to obstruct justice by feigning or exaggerating his memory problems in an effort to delay or avoid the proceedings against him. Gov't's Mem. at 16-19. The Government also argues that Mr. Nygren attempted to unlawfully influence a witness during a secretly recorded conversation with BBY's owner. Id. at 13-15. The Government construes a certain exchange of words as a threat to destroy the reputation of the victim if he did not make a deal with Mr. Nygren to avoid criminal prosecution, a ...

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