DOCKET

By Hand
Honorable Lewis A. Kaplan
United States District Court
Southern District of New York
500 Pearl Street
New York, New York 10007
Re: United States v. John Campos, S7 10 Cr. 336 (LAK)
Dear Judge Kaplan:
The Government respectfully submits this letter in support of its position that the Court
should accept the guilty plea of defendant John Campos (the "defendant") to a bank gambling
misdemeanor offense, in accordance with Rule 11 (c )(3) of the Federal Rules of Criminal
Procedure. For the reasons described below, Campos's plea is in the interests of the Government
and the defendant and otherwise constitutes a fair and just resolution ofthe matter pending
against him.
Background
Campos appeared before the Court on March 30, 2012 and entered a plea of guilty to
Superseding Information S7 IOCr. 336 (the "Information") pursuant to a plea agreement (the
"Plea Agreement") with the Government. As the Court found during the plea proceeding, the
defendant's plea was knowing and voluntary, and was supported by an independent basis in fact
concerning each of the essential elements of the offense. United States v. Campos, Tr., Mar. 28,
2012, at 18.
1
The Court engaged in a thorough allocution of the defendant, in accordance with
all of the requirements of Rule 11 of the Federal Rules of Criminal Procedure, and the defendant
expressly acknowledged that he had read and understood the Plea Agreement, which set forth,
among other things, the maximum penalties at issue, the parties' view of the applicable
Guidelines range, the fact that neither the U.S. Probation Office nor the Court would be bound
by the parties' Guidelines calculations, and the fact that the sentence imposed upon the defendant
would be solely determined by the Court.
The Court deferred acceptance of the plea and questioned the basis for allowing the
defendant to plead guilty to a single gambling count with a one year maximum sentence and the
proposed dismissal of the felony counts originally charged. The Government explained that the
The transcript is attached to this letter for the Court's convenience.
DOCUMENT
ELECTRONICALLY FILED
DOC#: ____ __
U.S. Department of Justice
United States Attorney
rr::::;:============::;f;oulhern District ofNew York
pri! 12, 2012
JUDGE KAPLAN'S CHAMBERS
e SilviO J. Mollo BUilding
ne Saint Andrew's Pla::a
ew York, New York 10007
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Hon. Lewis A. Kaplan Page 2
April 12,2012
misdemeanor charge resulted in a Guidelines range that is similar to the range that would apply
had the defendant pled guilty to the felony charges contained in the Indictment. (Tr. 18-22). The
Court then directed the Government to provide a letter setting forth "the rationale for acceptance
of the plea," noting that the Court would "leave the question of whether to accept the plea" until
the date provisional1y set for sentencing, unless the Court came to a decision on the matter
earlier. (Tr. 23). With this letter, the Government respectfully requests that the Court now
accept the plea.
Applicable Law
Federal Rule of Criminal Procedure I 1 (c)(3)(A) provides that where a plea agreement
provides for the dismissal of other charges (as is the case here), "the court may accept the
agreement, reject it, or defer a decision until the court has reviewed the presentence report." The
rules further provide that, should the Court reject a plea agreement of this kind, the defendant
must be provided with an opportunity to withdraw his plea, although the defendant may elect to
maintain his plea of guilty even without the benefits afforded by the rejected plea agreement.
Fed. R. Crim. P. 11(c)(5).
While we have found no Second Circuit cases directly on point, in United States v.
Severino, 800 F.2d 42, 46 (2d Cir. 1986), the Second Circuit, in a pre-GuideJines case, stated that
a district court may reject a plea if it "has reasonable grounds for believing that acceptance of the
plea would be contrary to the sound administration of justice." See also United States v. Torres
Echavarria, 129 F.3d 692, 696 (2d Cir. 1997) (holding that Severino's analysis remained good
law under the Guidelines). Other Circuits have held that the Government's decision to move to
dismiss charges in exchange for a plea to a lesser charge should be disturbed only where "the
action of the prosecuting attorney is such a departure from sound prosecutorial principle as to
mark it an abuse of discretion." United States v. Ammidown, 497 F.2d 615, 622 (D.C. Cir.
1974); see also United States v. Barker, 681 F.2d 589, 591-92 (9th Cir. 1982) ("The decision to
negotiate a plea bargain and seek dismissal ofthe indictment is within the executive's undeniable
discretion to decide not to pursue a particular prosecution any further .... We assume the judge
also has a supervisory duty to determine, from the standpoint of the public interest, after
considering the nature of the charges and the facts involved, whether reducing the plea is so
unreasonable that the prosecutor is not properly carrying out his function.") (internal citations
and quotation marks omitted); cf United States Securities & Exchange Commission v. Citigroup
Global Markets, Inc., --- F.3d ----, 2012 WL 851807 (2d Cir. 2012) ("the scope of a court's
authority to second-guess an agency's discretionary and policy-based decision to settle is at best
minimal. ").
Discussion
In this case, the Government's determination not to further prosecute the original charges
pending against Campos, in return for a plea to a single violation of 18 U.S.C. 1306, advances
the Government's interests and the defendant's interests, constitutes a fair and just resolution of
the matter, and accords with the sound administration of justice. That is true for a number of
reasons enumerated below in greater detail.
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Hon. Lewis A. Kaplan Page 3
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First, the misdemeanor to which Campos pled, 18 V.S.C. 1306, is targeted directly at
his particular offense conduct: causing a bank insured by the Federal Deposit Insurance
Corporation to process illegal gambling transactions. The stated Congressional purpose for the
statute was "To prohibit certain banks and savings and loan associations from fostering or
participating in gambling activities." Pub. Law 90-203 (Dec. 15, 1967). That is what the
defendant principally did in this case: he used his role as Vice Chairman of and consultant to
SunFirst Bank ("SunFirst") to cause the bank to participate in illegal gambling activities.
Second, the Guidelines range stipulated by the parties in the Plea Agreement is
effectively the same as the range would have been had the defendant pled guilty to all five felony
gambling charges against him in the original indictment, S3 10 Cr. 336. Because the gambling
offenses were "connected by a common criminal objective" andlor "constitut[ed] a common
scheme or plan," a plea to all five gambling counts would have been treated as a single group of
closely related counts, pursuant to V.S.s.G. 3Dt.2(b). The base offense level for the felony
gambling counts would have been 12 pursuant to V.S.S.G. 2E3.l - precisely the same as it is
for the single misdemeanor gambling offense. Thus, with a two-level reduction for acceptance
of responsibility pursuant to V.S.S.G. 3El.1 (a), and an additional two-level reduction for a
minor role pursuant to V.S.S.G. 3B 1.2(b), the adjusted offense level for either a felony or
misdemeanor gambling offense is the same: 8, which results in a Guidelines range of 0-6 months
imprisonment for a defendant with no criminal history.2
Third, the Plea Agreement required the defendant to execute a consent order with the
Federal Deposit Insurance Corporation that would bar him from "participating in any manner in
the affairs of any depository institution." In other words, the defendant would be barred from the
banking industry for life. Had the defendant pled guilty to, or been convicted of, the felony
gambling charges in the Indictment, the defendant may also have been subject to such a lifetime
ban,3 but obtaining such a ban would have required the Federal Deposit Insurance Corporation to
bring a separate proceeding and potentially litigate the issue. Accordingly, securing a lifetime
ban from banking in connection with the defendant's plea to the misdemeanor charge
2 Even a plea to the originally charged money laundering offense would not have
sharply altered the Guidelines range. While the Court observed that Campos had been accused
of (and admitted to in connection with the plea) processing over $200 million in gambling
transactions, the base offense level for laundering would not have been based on the dollar value
of the transactions but on the base offense level for gambling -level ]2 - because "the defendant
committed the underlying offense." V.S.S.G. 2S 1.1 (a)(2). The base offense level of 12 would
be increased by 2 levels because the conviction would have been under 18 V.S.C. 1956 (see
V.S.S.G. 2S1.1(b)(2 and possibly a further two levels for "sophisticated laundering" (see
V.S.S.G. 2Sl.l(3, resulting in a total offense level of 16. With a two-level minor-role
reduction and a two-level reduction for acceptance of responsibility, the final offense level would
be 12, which would have resulted in a Guidelines range of 10-16 months, the low-end of which
falls well within the one-year statutory maximum in 18 V.S.C. 1306.
3 A felony conviction does not automatically trigger a lifetime ban from the banking
industry, and whether such a ban is ultimately imposed depends on various factors under FDIC
regulations.
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Hon. Lewis A. Kaplan Page 4
April 12,2012
accomplishes the important objective of preventing the defendant from abusing his position at
another bank in the future.
4
Thus, as compared to the consequences the defendant would face
after a conviction on all five of the gambling charges in the Indictment, the Plea Agreement the
Government has reached with Campos exposes him to the same Guidelines recommendation
(albeit a lower statutory maximum), and includes an additional guaranteed ban from the banking
industry.
Fourth, while the defendant's conduct was serious and certainly deserving of criminal
prosecution, his role in the conspiracy charged in the Indictment was relatively minor as
compared to the other defendants charged. The other defendants charged are either (l) founders
and/or senior executives ofthe Poker Companies or (2) payment processors who served as agents
of the Poker Companies in seeking to identify ways to get United States banks to process the
transactions (usually by lying to banks but, sometimes, as was the case with Campos and
SunFirst, offering to prop up failing financial institutions in return for poker processing). Unlike
each of the other defendants - who continued to seek new processing channels over a multi-year
period notwithstanding numerous arrests and seizures Campos processed the transactions only
for his own bank for a period of less than one year. Unlike the other defendants, most of whom
made millions from their illegal conduct, Campos received only $20,000 ($4,500 of which he
kept) as a direct payment for poker processing, although such processing also served temporarily
to prop up SunFirst and Campos's investment in it (now worthless given the regulatory seizure
of the bank). Finally, unlike all but one of the other defendants, Campos was never charged with
any bank or wire fraud offense relating to the disguising of gambling transactions.
Fifth, the defendant's willingness to plead guilty to a misdemeanor gambling offense had
to be assessed against the litigation risk of proceeding to trial on six counts which, with one
exception, carried an identical Guidelines range. While the Government's case against the
defendant is strong - as we noted during the plea proceeding, there is evidence that SunFirst's
lawyer explicitly told Campos that processing poker transactions was illegal, and there is no real
dispute that Campos brought the poker business into SunFirst andlnar'sunFirst processed more
than $200 million in transactions for the Poker Companies - Campos's unique position in the
case provided him with a slightly more viable good f a i t ~ argument, one not available to other
defendants, to the extent alleged good faith reliance evidence would be admissible at trial. In
order to induce bankers like Campos to process their transactions, the Poker Companies and their
agents such as Elie plied Campos with mUltiple legal opinions regarding the alleged legality of
poker processing. Unlike the other defendants - who engaged in, or were aware of, systematic
government action against the Poker Companies and who deliberately solicited legal opinions
whose conclusions were at odds with objectively identifiable reality Campos had a narrower
window into the legal issues confronting the online poker industry, and unlike the other
defendants, was not aware of many of the arrests, court-ordered seizures and other events that
4 While this ban does not, as the Court observed, cover the securities industry, the
defendant has never before been involved in that industry and there is no indication that he
would likely be involved in the future. The defendant's career involved operating a steel
business before he invested money from that business in SunFirst and played a role in running
the bank.
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Hon. Lewis A. Kaplan Page 5
April 12, 2012
cast substantial doubt on the validity of these opinions. As a result, there is an enhanced risk that
jurors could conceivably hesitate to convict Campos despite other evidence tending to negate
Campos's alleged good faith.
For these reasons, the Government submits that the Plea Agreement entered into between
the Government and the defendant is fair and just and well within the bounds of appropriate
prosecutorial discretion. Accordingly, we respectfully request that the Court now accept the
defendant's plea of guilty pursuant to the Plea Agreement.
Respectfully submitted,
PREET BHARARA
By:
Arlo Devlin-Brown/Andrew D. Goldstein
Assistant United States Attorneys
(212) 637-250611559
Cc (by email): Fred Hafetz, Esq.
Neil Kaplan, Esq.
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