United States District Court, S.D. New York
October 10, 2004.
UNITED STATES OF AMERICA,
RICK SCARBROUGH, Defendant.
The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
On April 15, 2004, defendant Rick Scarbrough ("Scarbrough")
appeared before the Honorable Douglas F. Eaton of this district
and allocuted to the conduct charged in both counts of the
information filed that same date, including one count of wire
fraud in violation of 18 U.S.C. § 1343 and one count of bank
fraud in violation of 18 U.S.C. § 1344. Scarbrough will be
sentenced to time served and three years' supervised release. A
special assessment fee of $200 is mandatory and is due
immediately. There will be no ruling as to restitution at this
The undersigned, having reviewed the Presentence Investigation
Report prepared by the United States Probation Office, relies on
the facts as set forth therein. The Offense Conduct
From May 20, 2002 through July 4, 2003, Scarbrough fraudulently
obtained funds from his employers through various schemes. From
May 2002 through August 2002, Scarbrough worked for MSB
Strategies, Inc. ("MSB"). Without approval and without authority,
Scarbrough opened on-line computer banking facilities on behalf
of MSB with Chase Bank in New York. From June 2002 through July
2002, these on-line banking facilities were used to transfer
funds from MSB's account in Manhattan to Paypal accounts
controlled by Scarbrough kept in California. These unauthorized
transfers totaled at least $8,000.
Scarbrough remained an employee when the owner of MSB formed a
new company called Reiter/Begun Associates, LLC ("Reiter/Begun")
in August 2002. In August 2002, Scarbrough began forging
signatures on Reiter/Begun checks and deposited those checks to
MSB's account, which remained open at Chase Bank in Manhattan.
Without approval or authority, Scarbrough transferred the funds
from MSB's account over the internet to Paypal accounts he
controlled in California. These unauthorized checks and transfers
totaled at least $56,000.
Between June 2003 and July 2003, Scarbrough, acting without
approval or authority, utilized electronic funds transfers to
withdraw monies from Reiter/Begun's account with Chase Bank in Manhattan and deposited them into accounts he controlled with
Paypal in California. These unauthorized transfers totaled at
From March 13, 2003 through July 2003, Scarbrough forged
authorization signatures on Reiter/Begun checks made payable to
"Richard Scarbrough." The checks were drawn on an account with
Chase Bank in Manhattan and they totaled at least $23,000.
Scarbrough was arrested on November 7, 2003, in connection with
the offenses charged and thereafter released.
Scarbrough was born in 1957 in Hiawatha, Kansas, and moved to
New York in 1984. Scarbrough became involved in a romantic
relationship in 1985 and the relationship lasted until
Scarbrough's partner died of AIDS in 1998.
Scarbrough reportedly commenced smoking marijuana on a daily
basis in 1976 and continued until 1996, when his physician
referred Scarbrough to a psychiatrist who diagnosed him with
major depression and generalized anxiety disorder. Scarbrough
then reportedly abused anti-anxiety medicine as well as Ketamine
and Ecstasy. In 1998, after his partner died, Scarbrough added
alcohol to the mix. In 1999, Scarbrough commenced a series of
detoxification and drug treatment programs and he has reportedly not used any
illicit substances since that time. In December 2000 he was
reportedly employed by MSB as an office manager.
In July 2003, after Scarbrough was fired by Reiter/Begun as a
result of the underlying offense conduct, he became suicidal and
was reportedly admitted to the St. Vincent's Hospital Psychiatric
Unit in Manhattan for a period of approximately two weeks. While
he was at St. Vincent's Hospital, Scarbrough reported a history
of panic attacks and suicide attempts. Scarbrough was discharged
against medical advice on August 5, 2003 and was admitted to
Woodhull Health and Mental Health Center in Brooklyn after
overdosing on over-the-counter and psychotropic medications
shortly thereafter. He was discharged on August 26, 2003. In
October 2003, Scarbrough was diagnosed with bipolar disorder by a
psychiatrist at the Valeo Psychiatric Services Clinic in Topeka,
Scarbrough is currently unemployed and his credit report
reflects two federal tax liens as well as several outstanding
judgments and collection items/accounts.
Based on information available from the Federal Bureau of
Investigation and the New York State Division of Criminal Justice
Services, Bureau of Identification, Scarbrough has no prior
criminal convictions. The Guidelines
The November 1, 2002 edition of the United States Sentencing
Commission Guidelines Manual ("U.S.S.G."), in effect at the time
the majority of offense conduct occurred, has been utilized in
this case for calculation purposes, in accordance with U.S.S.G. §
Pursuant to U.S.S.G. § 3D1.2(d), both counts of the information
are grouped together into a single group because the offense
level is determined largely on the basis of the total amount of
The guideline for a violation of 18 U.S.C. §§ 1343 and/or 1344
is found in U.S.S.G. § 2B1.1. Pursuant to U.S.S.G. § 2B1.1(a),
the base offense level is 6.
As the loss amount totaled $95,000, eight levels are added
pursuant to U.S.S.G. § 2B1.1(b)(1)(E).
Based on Scarbrough's plea allocution and his recognition of
responsibility for the offense, the offense level is reduced by
two levels pursuant to U.S.S.G. § 3E1.1(a).
The resulting adjusted offense level of 12. As Scarbrough has no known criminal convictions, he has zero
criminal history points and a Criminal History Category of I.
Based on these calculations, the guideline range for
imprisonment is ten to sixteen months. Under the guidelines, the
minimum term of imprisonment may be satisfied by (1) a sentence
of imprisonment or (2) a sentence of imprisonment that includes a
term of supervised release with a condition that substitutes
community confinement or home detention, provided that at least
one-half of the minimum term is satisfied by imprisonment,
pursuant to U.S.S.G. § 5C1.1(d). The statutory maximum term of
imprisonment for Count 1 is 20 years, pursuant to
18 U.S.C. § 1343. The statutory maximum term of imprisonment for Count 2 is
30 years, pursuant to 18 U.S.C. § 1344.
A term of supervised release of not more than three years is
required if a sentence of imprisonment is imposed on Count 1,
pursuant to 18 U.S.C. § 3583(b) (2). A term of supervised release
of not more than five years is required if a sentence of
imprisonment is imposed on Count 2, pursuant to
18 U.S.C. § 3583(b)(1). Pursuant to 18 U.S.C. § 3624(e), multiple terms of
supervised release run concurrently.
The guideline range for a term of supervised release on Count 1
is at least two years but not more than three years, pursuant to
U.S.S.G. § 5D1.2(a)(2). The guideline range for a term of supervised release on Count 2 is at least three years but not
more than five years, pursuant to U.S.S.G. § 5D1.2(a)(1). If a
sentence of imprisonment of one year or less is imposed, a term
of supervised release is not required but is optional, pursuant
to U.S.S.G. § 5D1.1(b). Supervised release is required if a term
of imprisonment of more than one year is imposed or when required
by statute, pursuant to U.S.S.G. § 5D1.1(a).
Scarbrough is not eligible for probation because Count 2 is a
Class B felony, pursuant to 18 U.S.C. § 3561(a)(1) and U.S.S.G. §
The statutory maximum fine is $250,000 on each count, pursuant
to 18 U.S.C. § 3571. The fine range for the instant offense under
the guidelines is from $3,000 to $30,000, pursuant to U.S.S.G. §
Subject to Scarbrough's ability to pay, the expected costs to
the government of any imprisonment, probation, or supervised
release shall be considered in imposing a fine, pursuant to
U.S.S.G. § 5E1.2(d)(7). The most recent advisory from the
Administrative Office of the United States Courts suggests a
monthly cost of $1,931.97 to be used for imprisonment, a monthly
cost of $292.21 for supervision, and a monthly cost of $1,590.66
for community confinement. A special assessment of $200 is mandatory, pursuant to
18 U.S.C. § 3013.
Full restitution to the victim is required under
18 U.S.C. §§ 3663A and 3664. Pursuant to U.S.S.G. § 5E1.1(a)(1), where there
is an identifiable victim, a restitution order shall be entered
for the full amount of the victim's loss if such order is
authorized under 18 U.S.C. § 3663A. If the government is unable
to identify the loss amounts, the restitution issue may be
deferred for a period up to 90 days after sentencing for final
determination of the victim's losses, pursuant to
18 U.S.C. § 3664(d)(5).
Pursuant to the Violent Crime Control and Law Enforcement Act
of 1994, all offenders on probation, parole or supervised release
for offenses committed after September 13, 1994, are required to
submit to one drug test within fifteen days of commencement of
probation, parole or supervised release and at least two drug
tests thereafter for use of a controlled substance, unless
ameliorated or suspended by the court due to its determination
that the defendant poses a low risk of future substance abuse as
provided in 18 U.S.C. §§ 3563(a)(5) and 3583(d).
For the instant offense, Scarbrough is sentenced to time served
and three years' supervised release, which represents a downward departure from the sentence prescribed by the
guidelines. Even if the guidelines were deemed unconstitutional,
the sentence imposed here would nonetheless be appropriate, as it
is the same sentence that would have resulted from due
consideration of the circumstances of the offense and of the
individual being sentenced and in the exercise of this Court's
A special assessment fee of $200 payable to the United States
is mandatory and due immediately. As Scarbrough lacks any
financial resources and in consideration of the factors listed in
18 U.S.C. § 3572, no fine is imposed.
A reduced mental capacity, if it contributed to the commission
of the offense, may represent a factor warranting consideration
for downward departure under U.S.S.G. § 5K2.13 where, as here,
the underlying offense was non-violent and the defendant's
criminal history does not indicate a need for incarceration to
protect the public.*fn1 "Diminished capacity is an exception
to the general rule that `[m]ental and emotional conditions are not
ordinarily relevant in determining whether a sentence should be
outside the applicable range.'" United States v. Silleg,
311 F.3d 557, 562 (2d Cir. 2002) (quoting U.S.S.G. § 5H1.3). Indeed,
"[d]iminished capacity is an `encouraged' basis for departure
because it is a factor the Sentencing Commission generally was
`not . . . able to take into account fully in formulating the
guidelines.'" United States v. Kim, 313 F. Supp. 2d 295, 297-98
(S.D.N.Y. 2004) (quoting U.S.S.G. § 5K2.0 (2001)). "To establish
diminished capacity . . . a defendant need only persuade a judge
by a preponderance of the evidence that he suffers from `reduced
mental capacity' and that a `causal link [exists] between that
reduced capacity and the commission of the charged offense.'"
United States v. Ventrilla, 233 F.3d 166, 169 (2d Cir. 2000)
(per curiam) (citations omitted and alteration in original);
accord Silleg, 311 F.3d at 561.
Scarbrough's judgment and his ability to control his behavior
during his commission of the underlying offenses were impaired by
his longstanding mood disorder. According to records of his psychiatric hospitalization following commission of the
offenses charged, his mental capacity appears to have been
significantly impacted by an apparently pre-existing mood
disorder as well as grief for the loss of his partner. In
particular, it appears that Scarbrough used the proceeds of the
offense to renovate the apartment in which he resided with his
partner before the latter died, reportedly creating shrines for
his partner. The record suggests that Scarbrough's ability to
understand and fully appreciate the nature of his conduct was
impaired because he suffered from a significantly reduced mental
capacity during the period of the offense conduct. A downward
departure is, accordingly, both authorized and appropriate here.
The extent of the departure here, which calls for a limited
period of incarceration and reflects a four-level reduction in
the offense level, is proper in view of the non-violent nature of
the offenses charged, Scarbrough's lack of any prior criminal
history, the circumstances under which the offenses were
committed, and the significant degree to which Scarbrough's
reduced mental capacity contributed to the commission of the
offenses. A lesser departure would require a period of
incarceration that would defeat the goal of rehabilitation under
these particular circumstances. The goal of punishment is
adequately served by a limited period of incarceration combined
with a significant term of supervised release and the constraints
of the various terms and conditions imposed thereunder. As mandatory conditions of probation, Scarbrough shall (1)
abide by the standard conditions of supervision (1-13); (2) not
commit another federal, state, or local crime; (3) not illegally
possess a controlled substance; and (4) not possess a firearm or
The mandatory drug testing condition is suspended due to
imposition of a special condition requiring drug treatment and
testing. Scarbrough shall participate in a program approved by
the United States Probation Office, which program may include
testing to determine whether Scarbrough has reverted to using
drugs or alcohol. Scarbrough will be required to contribute to
the costs of services rendered (co-payment), in an amount
determined by the probation officer, based on ability to pay or
availability of third-party payment.
Scarbrough shall not incur new credit charges or open
additional lines of credit without the approval of the probation
officer unless he is in compliance with any installment payment
schedule set with regard to restitution or co-payment. In
addition, he shall provide the probation officer with access to
any requested financial information.
Scarbrough shall participate in a mental health program
approved by the United States Probation Office. He shall continue
to take any prescribed medications unless otherwise instructed by his health care provider. Scarbrough shall contribute to the
costs of services rendered not covered by third-party payment if
he has the ability to pay. The release of available psychological
and psychiatric evaluations and reports to his health care
provider is hereby authorized.
Scarbrough shall report to the nearest Probation Office
immediately and shall be supervised by the district of residence.
This sentence is subject to modification at the sentencing
hearing now set for October 12, 2004, at which time a date for
the final determination of the victim's losses, not to exceed 90
days after sentencing, shall be set.
It is so ordered.