By Matthew Russell Lee, Patreon here Thread
SDNY COURTHOUSE, June 5 – Arizona based crypto-currency maven Reginald Fowler, with multiple accounts with the HSBC, appeared ready to plead guilty on January 15 to a single count, "operation of an unlicensed money transmittal business."
After that fell through on financial issues, Fowler was hit with a five count Superseding Indictment, adding as a fifth count the catch-all, Wire Fraud. On March 5, U.S. District Court for the Southern District of New York Judge Andrew L. Carter emphasized this fifth count to Fowler, see below.
On April 21, 2022, Fowler wrote in seeking for the second time to plead guilty, and soon: "As counsel to Defendant Reginald Fowler, I write to inform the Court that after much deliberation, Mr. Fowler is prepared to forego his right to trial, and, instead, to enter an open plea to the charges contained in the instant indictment. We, therefore, respectfully ask the Court to schedule a Rule 11 change of plea hearing, and we seek guidance as to whether Your Honor will conduct the hearing, or refer it to magistrate’s court, and, if the latter, whether the Court would like the government and me to make those arrangements. I respectfully request that the change of plea hearing be scheduled for this coming Monday, April 25th, and that the hearing occur virtually, if at all possible. Mr. Fowler resides in Arizona, and the daily average of “confirmed and probable” Covid-19 cases in New York City has dramatically increased." Full letter on Patreon here.
On April 22, Judge Carter approved and scheduled it: "Change of Plea Hearing set for 4/25/2022 at 02:00 PM before Judge Andrew L. Carter Jr."
On April 25, Inner City Press covered the guilty plea proceeding and live tweeted it here, vlog here:
Reginald Fowler has just said "guilty" to five counts after bristling at possible maximum sentence of 90 years.
Fowler says, I know very little about crypto. I did business with AmericaExpress. I am really sorry, mote than you know.
Fowler is fading in and out. Will this second Fowler plea also fall apart? His lawyer: Reggie, try to speak up. Or I could allocute for him. AUSA: That is not our preference.
There's more: the court reporter has an attorney client relationship with Fowler's lawyer. Judge Carter: Can you take the record accurately? A:Yes.
Judge Carter has just accepted Fowler's (2d) guilty plea.
AUSA Swett says forfeiture may be as high as $750 million. Fowler's lawyer: we do not agree with the US theory.
Sentencing was first set for August - then on June 22, this: "ORDER as to Reginald Fowler. Due to a conflict on the Court's calendar, the August 30, 2022 sentencing is being adjourned to September 13, 2022 at 2:00 p.m. SO ORDERED. (Signed by Judge Andrew L. Carter, Jr. on 6/22/2022)."
On September 13, Fowler's sentencing was pushed back to March 14, 2023.
And on March 2, it was pushed back again: "ORDER as to (19-Cr-254-1) Reginald Fowler. The sentencing scheduled for March 14, 2023 is adjourned to April 20, 2023 at 3:30 p.m. SO ORDERED. ( Sentencing set for 4/20/2023 at 03:30 PM before Judge Andrew L. Carter Jr.)(Signed by Judge Andrew L. Carter, Jr. on 3/2/2023)."
On March 15, the US Attorney's Office wrote in to ask Judge Carter to "restrict him from gambling activities." They says "the Government has obtained records from a casino company in Arizona that indicate that during the pendency of the defendant's criminal case, he has gambled hundreds of thousands of dollar." They do not say if Fowler won or lost, only that "every dollar the defendant has risked at these casinos is a dollar less likely to be paid to victims in restitution."
On March 23, Fowler's lawyer wrote in to say "we do not object to the Government's request."
On March 24, Judge Carter granted the US Attorney's Office's request: " ENDORSEMENT: The application is GRANTED. So Ordered. (Signed by Judge Andrew L. Carter, Jr. on 3/24/2023)."
On April 18, the US filed a letter seeking a sentence of 84 months - and forfeiture of $740 million, restitution of $53 million to the Trustee of the Alliance of American Football.
Early - 4 am - on April 20, the day set for sentencing, Fowler's lawyer wrote in to ask for a delay, saying among other things "Alliance of American Football (“the League”) written after the lawyer compiled more than one million records, engaged in discussions with creditors, and interviewed former League representatives, their attorneys, and the cofounder of the League. I will need to adequately review this proffer and the very important issues raised in it to prepare to cross-examine this important witness... It is now after 3:30 a.m., and we worked together until just a few hours ago." Full letter on Patreon here.
Early on the afternoon of April 20, Judge Carter denied the request for delay: "ENDORSED LETTER as to (19-Cr-254-1) Reginald Fowler addressed to Judge Andrew L. Carter, Jr. from Attorney Edward V. Sapone dated April 20, 2023 re: I am counsel to Defendant Reginald Fowler. I write to respectfully request a one-week adjournment of the sentencing hearing from today at 3:20 p.m. to anytime on April 27th. ENDORSEMENT: The application is DENIED. So Ordered. (Signed by Judge Andrew L. Carter, Jr. on 4/20/2023)."
Inner City Press went to the sentencing at 3:30 pm. But it was not a sentencing. Instead, only one witness spoke, from the podium. In the audience, Mr. Engel said he would not return on on May 2 due to a trial he described in Texas. So the sentencing is pushed back to May 17, with a join status letter due on May 2.
On May 3, with a one day delay, the US filed a joint letter stating that Fowler's defense intends to cross examine Engel on May 17, but that no further Fatico hearing is needed. The defense also intends to make legal but not factual arguments about the sentencing guidelines and forfeiture.
On May 16-17, the sentencing was delayed again, to June 5: "Minute Entry for proceedings held before Judge Andrew L. Carter, Jr: Telephone Conference as to Reginald Fowler held on 5/16/2023. AUSAs Sebastian Swett, Samuel Raymond and David Zhou for Government. Defendant appears with attorney, Edward V. Sapone. The 5/17/23 sentencing is adjourned to 6/5/23 at 10:00 a.m. (Sentencing set for 6/5/2023 at 10:00 AM before Judge Andrew L. Carter Jr.)."
On June 5 Fowler was sentenced to 75 months. Inner City Press was there, thread here:
All rise!
Judge Andrew L. Carter: I've reviewed several victim impact statements. The defense objects to the sentencing guidelines calculation, of 188 to 235 months; it says the loss is above $250 million but less than $550 million
Judge: I find the loss to be greater than $550 million, and more than 10 victims, includimg the AAF. I will apply a reduction under 4c1.1 even though it is not in effect yet. So, guideline of 151 to 188 months. Restitution of $53 million already sign by Mr Fowler
Fowler's lawyer: The proposed forfeiture of $740 million violates the 8th Amendment AUSA: Fowler hasn't made financial disclosure Judge: I'll get back to that. In terms of sentencing, I'm thinking that 6 or 7 years would be appropriate. But I'll hear from counsel
Fowler's lawyer: He built ice skating rinks. He was in a dark place: the bank didn't lose a dollar. We admit AAF players were hurt for 60 days. We ask for grace and mercy, home detention only. Judge: He had a had upbringing - but committed this crime at 59.
AUSA: THe irony is that Fowler hurts people just like him trying to raise themselves by sports. He lied to banks that these were real estate accounts.
AUSA: Fowler's fraud was the beginning of the more recent frauds in the crypto space, and the failure of banks like Silvergate and Signature. [Note: prosecutor names those, but not FTX or SBF. What sentence would they ask for SBF?]
AUSA: Fowler kneecapped the AAF football players- they were on national TV but not being paid. [Fowler passses Sapone a note] AUSA: Fowler had counterfeiting materials in 2016 at the Canadian border and again in 2019. Fowler can't just fake it til he makes it
AUSA now mentions SBF lying to banks; says Fowler "picked up this offense and ran with it," more football wordplay, along with a new reference to "heavy lifting."
Fowler: I have harmed the people of the AAF and my family. I am embarrassed and ashamed. (Sobs) I don't ever want to be here again. Judge: I believe a variance downward is appropriate: I am not considering the counterfeiting just raised. I will impose 75 months
Now AUSA asks for immediate remand to prison, saying that Fowler's romantic partner recently went to Europe and withdrew money he controls
Note: There are no US Marshals here in the courtroom. Fowler's lawyer: Let him go home and organize his affairs. His romantic partner may have gone to Europe but didn't withdraw any money
Judge: I'll think about this. I'll be back. Judge is back, asks why he cannot consider release under exceptional circumstances? I'll step back out and let you think about it. Leaves. Still no US Marshals here in the courtroom
Judge is back again. Fowler's lawyer: He runs a business; he has a dog. Judge: I am not going to remand him today. He is not likely to flee. GPS when back. 21 days then surrender to Marshals in Phoenix by 10 am on June 30.
Watch this site.
Back on December 22, 2020 in a related civil case, Fowler's lawyers Michael Hefter and Samuel Rackear asked to withdraw. (They also spoke darkly about press coverage and stories about Fowler's cases and requests). SDNY Judge Katherine Polk Failla said she had checked the docket in the criminal case before Judge Carter, but also could not see the redacted part.
Judge Failla deferred ruling pending Hefter's submission of an ex parte letter, which was apparently filed on December 23. It did not go into the docket. But on December 28, the request was partially granted: "ORDER granting [159] Motion to Withdraw as Attorney. The Court is in receipt of the motion to withdraw filed by counsel for Defendant Reginald Fowler on December 11, 2020 (Dkt. #159), and counsel;s supplemental ex parte letter submitted to the Court on December 23, 2020. The Court has carefully reviewed the submissions and has heard from the parties regarding the pending motion to withdraw at a December 22, 2020 conference. Given: (i) counsel's work in this case to date with the contemporaneous knowledge they had when performing that work, and (ii) the timing of the motion to withdraw in the midst of the briefing schedule for Mr. Fowler's motion to dismiss, the Court provisionally grants the motion to withdraw, contingent on counsel's submission of Mr. Fowler's outstanding reply brief in further support of his motion to dismiss. Mr. Fowler's reply brief shall be due on or by January 19, 2021. Attorney Michael C. Hefter & Samuel Rackear terminated." Watch this site.
This civil case is In re Tether and Bitfinex Crypto Asset Litigation, 19-cr-9236 (Failla).
On November 23, Judge Carter set in motion of processing of partial unsealing between Fowler's exiting lawyers and the US Attorney's Office.
Now on December 18 Judge Carter held another proceeding, allowing Fowler's lawyers to withdraw and postponing his trial indefinitely. Inner City Press live tweeted it, here:
AUSA: Mr. Fowler has been on notice. He should be required to retain counsel & keep to trial date.
Judge Carter: Mr. Fowler, I am allowing your counsel to withdraw. You could fill out a financial affidavit for court appointed counsel.
Fowler: I will seek a new one
Fowler: I have used all my asset. I put my properties up for bail. I can't get a bank account. We don't have any income. We can't get to the assets. I want to find a firm that understands that.
Fowler: If I have to, I'll come back and ask the court to help me find an attorney. I don't mind to sound disrespectful, sir. Judge Carter: It's fine. Given the holiday, I'll give you 45 days. Fowler: Yes sir, thank you.
Judge Carter: We are adjourned, to Feb 9. Judge Carter: It is unlikely a new counsel would be ready for trial in April. So I'm inclined to adjourn it, sine die. Mr Fowler: Thank you for your consideration, sir.
Judge Carter: We are adjourned.
Watch this site.
We'll have more on this - for now, here's the November 13 thread:
AUSA Greenwood says Fowler's lawyers should have to say more about why they want to withdraw. But US has said it is ok to make the filing secretly. [Inner City Press disagrees]
AUSA Greenwood: Let them file ex parte, then given the government access to all that is non privileged. [Inner City Press: and what about the public?]
AUSA Greenwood: These lawyers could then be employed as CJA [Criminal Justice Act] Judge Carter: I give permission for ex parte filing on this conflict. I understand there is a public right, but in the first instance it's outweighed here. [But not filed yet]
Judge Carter: Once I receive the documents I'll make a determination. [transitions to new Rule 5(g), but doesn't read script since these lawyers may withdraw] AUSA Greenwood: A potential withdrawal would impact trial date. Adjourned.
Judge Carter proposed October 28 and Fowler's lawyers agreed. But the Assistant US Attorney said the lead counsel on the case has a trial near that time before Judge Denise Cote. She proposed August. Judge Carter said it is hard to get jurors in August "for a trial not as straight forward as a CBS Fall drama." Inner City Press was there; live tweeted thread here.
Finally the parties agreed to start the trial on Monday January 11, 2021. Afterward Inner City Press waited by the elevators and, to see if Fowler was able to talk about Bitfinex, asking for his views of the XFL. He smiled, but on the advice of counsel... In the proceeding reference was made to defrauding the now defunct American Alliance of Football. Inner City Press asked, Will the XFL fare better? No.
On October 15, Judge Carter held another proceeding and Inner City Press live tweeted it here and below.
Now on October 23, Fowler's lawyers have put in more about how they want money unfrozen to fund his defense (that is, themselves). They write: "We are counsel to Mr. Reginald Fowler in the above-referenced action, and we submit this letter jointly with the government to request a bail hearing during the week of October 26, 2020. At the October 15, 2020 status conference, we advised the Court that we had informed the government of our intention to request a modification of the defendant’s current bail conditions to allow him to fund his defense. The Court instructed the parties to file a joint status report on the bail application today. Unfortunately, the parties have been unable to reach an agreement. By way of summary, the defense seeks an adjustment of the May 8, 2019 letter (the “Letter”)(attached), endorsed by the Court, which served as the basis of Mr. Fowler’s release on bond with conditions. Among other elements, the Letter includes, as the fifth bail condition, that “[n]o new lines of credit without [Pretrial Services] approval” shall be issued to the defendant. The Letter also references the five properties that the government required the defendant to post as security for the $5 million personal recognizance bond. The defense requests modification of both of these items." Full letter on Patreon here.
From Oct 15: Fowler's lawyer wants a delay of January 2021 trial date. Cites Portugal, saying the COVID situation there is "worse that in the US."
Judge Carter: I think it makes sense to postpone the trial. We need one of the bigger rooms, my courtroom is not one. Let's make the January 11 trial date now just another telephone conference. "At once point there was almost a resolution..."
Judge Carter: It seemed that forfeiture was the sticking point at the time. Has there been any progress? The Court could deal with forfeiture without a jury trial. Any discussions?
Fowler's counsel: They superseded the indictment. All discussions stopped.
AUSA Seb Swett: It's true, since we superseded, no talks.
Judge Carter: Mr Fowler could plead to the indictment, without a deal with the government, and we deal with forfeiture separately. Any thoughts?
Fowler's lawyer: There was always a looming wire fraud count
AUSA Swett: We would request a new trial date be set, maybe three months out from January 11. Fowler's lawyer: We'd like the discovery for the wire fraud count. I don't see why since there's not threat of violence they are holding back all the 302s
Judge Carter: I'm not going to order US to provide that information, at least at this time. Let's pick an April trial date. Monday, April 12. We'll see what happens.
Fowler's lawyer: We'd like the security for his bond to be released. He's had $258 million frozen
Fowler's lawyer: We'd like a hearing on that next week.
Judge Carter: Let's set a date next week for a filing of a joint status report. Oct 23. And then a hearing if we need one. I exclude time to April 12, 2021. Adjourned.
Watch this site. More on Patreon here.
Previously, at what was billed as a change of plea proceeding, Fowler acknowledged the section of the law to which he was pleading guilty to violating: 18 US Code Section 1960. Yes, he said.
Judge Carter said, We are here for a change of plea, and there was no objection. Judge Carter read from a plea agreement that Fowler had signed. All was going according to plan, until the issue of $371 million in forfeiture came up.
This is a case Inner City Press will continue to follow. It is US v. Fowler, 19-cr-00254 (Carter).
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