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UNITED STATES v. HOFFENBERG

July 21, 1994

UNITED STATES OF AMERICA,
v.
STEVEN HOFFENBERG, Defendant.


SWEET


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D.J.

 Defendant Steven Hoffenberg has moved for an order specifically enforcing the Cooperation and Plea Agreement of September 23, 1993 (the "Agreement"), between Hoffenberg and the United States Attorneys' Offices for the Southern District of New York and the Northern District of Illinois. For the following reasons, this motion is denied as premature.

 Prior Proceedings

 Sometime prior to 1991, Hoffenberg and a number of corporate entities with which he was associated, including Towers Financial Corp. and others, came under investigation by the Securities & Exchange Commission ("SEC"). The SEC filed an action in this District against Hoffenberg and others in February 1993, and on February 17, 1993, Hoffenberg and certain other defendants agreed to a preliminary injunction (the "Consent Order") which, among other things, enjoined Hoffenberg and "each of his controlled, related, or affiliated entities . . . to hold and retain within their control, and otherwise prevent any withdrawal, transfer, pledge, encumbrance, assignment, dissipation, concealment, or other disposal of any funds, or other properties."

 In 1993, the United States Attorney for the Southern District of New York began a criminal investigation against Hoffenberg and others for conspiracy to obstruct the SEC's investigation during 1991 and 1992, and for various other criminal violations of the securities laws.

 In March 1993, Hoffenberg, through counsel, initiated a number of meetings which culminated in an oral understanding. Pursuant to that understanding, Hoffenberg agreed to talk to representatives of the United States Attorney's Offices for the Southern District of New York and the Northern District of Illinois, the FBI, and the SEC (collectively, the "Government"). In return, the Government agreed to grant Hoffenberg limited immunity for each of his proffers or debriefings.

 On September 23, 1993, Hoffenberg and the Government entered into the Agreement, which provided that Hoffenberg would be charged with four felony counts in the Southern District Information: (i) conspiracy to violate 15 U.S.C. §§ 78j & 78ff by fraudulently selling securities in violation of 18 U.S.C. § 371; (ii) mail fraud in violation of 18 U.S.C. § 1341; (iii) conspiring to obstruct justice in violation of 18 U.S.C. § 371; and (iv) tax evasion in violation of 26 U.S.C. § 7201. It was further agreed that Hoffenberg would plead guilty to and be sentenced on an information filed in the Northern District of Illinois in this District, and that this information would charge Hoffenberg with one count of mail fraud in violation of 18 U.S.C. § 1341.

 The Agreement states that:

 
Steven Hoffenberg shall truthfully disclose all information with respect to the activities of himself and others concerning all matters about which the [Government] inquire[s] of him, shall cooperate fully with the [Government], shall attend all meetings at which his presence is requested with respect to the matters about which the [Government] inquire[s] of him, and further, shall truthfully testify before the grand jury and/or at any trial or other court proceeding with respect to any matters about which the [Government] may request his testimony. Any assistance Steven Hoffenberg may provide to federal criminal investigators shall be pursuant to the specific instructions and control of the [Government]. This obligation of truthful disclosure includes an obligation upon Steven Hoffenberg to provide to the [Government], upon request, any document, record or other tangible evidence relating to matters about which the [Government] inquires of him.

 With respect to sentencing, the Agreement provided, in relevant part, that:

 
The [Government] will inform the sentencing judge and the Probation Department of: (i) this Agreement; (ii) the nature and extent of Steven Hoffenberg's activities with respect to this case; and (iii) the full nature and extent of Steven Hoffenberg's cooperation with the [Government] and the date when such cooperation commenced. In addition, if it is determined by the [Government] that Steven Hoffenberg has provided substantial assistance in an investigation or prosecution, and if Steven Hoffenberg has otherwise complied with the terms of this Agreement, the [Government] will file a motion, pursuant to Section 5K1.1 [the "5K Motion"] of the Sentencing Guidelines, advising the sentencing judge of all relevant facts pertaining to that determination and requesting the Court to sentence Steven Hoffenberg in light of the factors set forth in Section 5K1.1(a)(1)-(5).

 The Facts

 Beginning in 1993, the SEC asserted that Hoffenberg was not fully cooperating or complying with the Consent Order in that he allegedly was concealing assets and his alleged interest in a company called Diversified Credit Corporation (DCC), and was also ...


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