Why RHNJ's Teresa Giuduce Was Sentenced to Prison
Posted on Fri Oct 03, 2014 at 08:55:00 AM EST
Tags: Teresa Giudice (all tags)
Real Housewives of New Jersey co-star Teresa Giudiuce was sentenced to 15 months in prison yesterday, while her husband Joe received a 41 month sentence, in a federal fraud case. The Indictment included 41 counts of bank fraud, loan application fraud, bankruptcy fraud, and mail and wire fraud. Joe was also charged with tax offenses. Teresa pleaded guilty to four counts and Joe to five.
While I've never seen their TV show, I think the case has some interesting elements worth discussing.
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Teresa's sentencing guidelines were 21 to 27 months. Joe's guidelines were about double that. (The guidelines are not mandatory, and unless there is a mandatory minimum, which there was not in this case, the judge can impose a sentence below them.)
Teresa was hoping for probation. What went wrong? The judge said yesterday she had been inclined to grant probation, until Teresa submitted false information about her assets to the probation department which was preparing the presentence report for the court.
Backing up for a minute, here's how the Government described the fraud scheme in a pretrial pleading:
In sum, the Indictment charges Defendants in Count I with engaging in a mail and wire fraud conspiracy involving the submission of fraudulent mortgage and other loan applications and supporting documents to financial institutions and other lenders in order to obtain mortgage and other loans. The Defendants falsely represented on these loan applications and supporting documents that they were employed and/or receiving substantial salaries when, in fact, they were either not employed or not receiving such salaries.
The Defendants also created fake documents such as tax returns, Forms W-2, and paystubs, which they then submitted to the lenders in support of these fraudulent loan applications.
Counts 2 through 13 further charge Defendants with specific instances of bank and loan application fraud resulting from this unlawful agreement.
The Indictment charges in Counts 14 through 36 that, after accruing a large amount of mortgage and other debt in this fashion, Defendants engaged in bankruptcy fraud in connection with the Chapter 7 bankruptcy petition that they filed on October 29. 2009 in U.S. Bankruptcy Court in Newark. The Indictment alleges that during the course of the bankruptcy proceedings, the Defendants repeatedly concealed assets, made false oaths. and made false declarations.
Among other acts of concealment and false statements, Defendants intentionally failed to
disclose their ownership of certain income-producing properties as well as the income they were receiving from those properties. In many instances, these properties were the same properties that they had earlier acquired with the proceeds of false and fraudulent loans.Finally, the Indictment also charges Giuseppe Giudice with the willful failure to file tax
returns on the basis of his failure to tile a federal income tax return for the years 2004 through 2008.
Now back to the sentencing. After a defendant pleads guilty in federal court, they have to meet with the Probation Department. The Probation Department is tasked with writing a presentence report to the Judge, with a description of the offense, the history of the offender, the applicable guidelines, and a recommended sentence.
To prepare the report, the Probation Department requires the defendant fill out financial disclosure forms, listing his or her assets and liabilities and monthly expenses. Among other things, this helps the court determine whether the defendant has the ability to pay a fine. These documents are very important to the process. Submitting false information to the probation department can result in a separate charge of making a false statement to a federal official or obstruction of justice. (In Teresa's case, according to the Plea Agreement, she had to fill out disclosure forms that were drafted by prosecutors, rather than Probation's usual forms.)
The Judge believes Teresa lied on her financial disclosure forms. That is an affront to the court. And the judge made no bones about the impact. Until the discrepancy of Teresa's disclosures came to light, the Judge had been considering probation.
During Teresa Giudice's sentencing, [Judge] Salas said she had even considered giving her probation combined with home confinement and community service but changed her mind because of the omissions.
"You are a savvy businesswoman. You know how to brand yourself," she said. "You tell me you didn't understand you had to cooperate? It defies logic."
Instead, Teresa got 15 months in prison. According to the New Jersey Record,
The judge noted the total value of the discrepancies at more than $75,000, and cited seven assets that were not listed on any document provided to the court.
What did she leave out?
[A] pool table, jewelry, all-terrain vehicles, closets full of pricey handbags and expensive shoes when reporting their assets.
According to the Judge:
“If [Teresa] had put something down, anything, I think [probation] would have been fine with that,” Salas said of Teresa’s reports to probation officers. “She put nothing down, nothing.”
She repeatedly challenged Teresa’s attorney, Klingeman, to explain the problem-riddled documents. “I’ve been a judge for seven years and I have yet to ever see the mount of confusion and work that went into these financial disclosures,” Salas said.
The Judge didn't buy the attorney's explanation, that Teresa had hired an accountant to prepare the documents and assumed he'd do it correctly. She put the blame squarely on Teresa, telling her:
“I’m not sure you respect this court. I’m not sure you respect our laws. And I’m not sure you understand what you’ve done,” Salas said.
Teresa's plea agreement (Doc. 24, available on PACER) specifically addressed what could happen if she failed to disclose all her assets to probation:
Teresa Giudice agrees to disclose all of her assets to the United States on a Financial Disclosure Statement to be provided by this Office and agrees to provide the Financial Disclosure
Statement by the date that a draft presentence report is circulated in this matter. Teresa Giudice agrees that if the government determines that she has intentionally failed to disclose assets on that Financial Disclosure Statement, that failure constitutes a material breach of this agreement.In addition, Teresa Giudice consents to the administrative, civil, and/or criminal forfeiture of her interests in any assets that she failed to disclose on the Financial Disclosure Statement.
Should undisclosed assets that the defendant owns or in which the defendant has an interest be discovered, Teresa Giudice knowingly and voluntarily waives her right to any required
notice concerning the forfeiture of said assets. Teresa Giudice further agrees to execute any document necessary to effectuate the forfeiture of said assets.
It remains to be seen whether the Government will now seek to forfeit Teresa's handbags and shoes or her pool table.
Despite the judge's belief that Teresa lied on her disclosure forms, she still imposed a sentence below the guidelines. Her reasons: The couple has four daughters, Teresa has aging parents, and she was less culpable than her husband. She also gave the couple another break: They can serve their sentences sequentially. Teresa will begin her sentence in January. When she gets out, Joe will start his sentence.
Joe, however, may not make it home. Apparently, he's not a U.S. citizen, having been brought here as a baby by his parents. He says he didn't learn he wasn't a citizen until he was an adult. Bankruptcy fraud is an aggravated felony, requiring deportation at the end of his sentence.
The Guiduces must also pay almost $400k in restitution. Their bankruptcy discharge was denied so they still owe $13 million to creditors. Yet it doesn't seem to have had much of an impact on their lifestyle -- or else, as the judge said, they just don't get it:
When it was over, the couple left the federal courthouse in Newark holding hands. They were surrounded by security as they made their way to a white Mercedes-Benz SUV.
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