Case 5:15-cr XR Document 52 Filed 01/23/16 Page 1 of 12 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

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1 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 1 of 12 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION UNITED STATES OF AMERICA, ) Plaintiff, ) v. ) NO: SA: 15-CR-00269(1)XR ) LAURIE MAYFIELD, ) Defendant. ) DEFENDANT S SENTENCING MEMO AND RESPONSE TO GOVERNMENT S SENTENICNG MEMO COMES NOW Kira Anne West, counsel for Ms. Laurie Mayfield, defendant in the above numbered case, and files this additional sentencing memorandum and states the following: This memorandum is filed at the request of the Court and in response to the Government s Sentencing Memorandum. As argued before, the loss in this case is nowhere near the $830,000 the Government and Vantage Bankcorp claim. Also as previously argued and shown, there can be no loss when the same person owns most of all the shares of each bank. Therefore, under the loss table found in the USSG, Mrs. Mayfield s Base Offense level starts at 7, with an addition of 8 because of a loss of more than $95,000 but less than $150,000, and an addition of 2 for adjustment for Role in the Offense. With a reduction of three levels for acceptance of responsibility, at a level 14, Mrs. Mayfield s sentencing range is months. Again, for reasons previously stated in Defendant s first sentencing memo, Mrs. Mayfield is respectfully requesting a sentence of time served, supervised release, community service, and restitution. This is a sentence that would be sufficient but not greater than necessary. 1

2 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 2 of 12 A. THE PLEA AGREEMENT, THE CASHIER S CHECKS & AMEX CARD The plea agreement to which Mrs. Mayfield agreed to with the government states Due to some unauthorized cashier s checks in the amount of $68, that she had issued to herself as well as other accounting irregularities, by early 2012, the bank was carrying an out of balance amount (outage) of approximately $830, A fair reading of the plea agreement appears to bind the parties to a finding of actual loss. Mrs. Mayfield gave up her rights to trial by jury, the right to call and confront witnesses, as well as many other civil and constitutional rights when she entered into this agreement with the Government. Not a single motion was filed on her behalf. She has completely and truthfully complied with every aspect of her plea agreement. In fact, she went beyond what was required of her in the plea agreement. She was required to meet with law enforcement, not the Bank, but she did that in the spirit of cooperation. Now the Government, after realizing there was no investigation by the FBI, no forensic audit that was previously promised, no investigation of any other bank employees and very few bank records that are reliable and/or available, and no idea where the $817, went is trying to create a $817, loss where one much smaller exists. Defendant s first Sentencing memo, specifically exhibit 1, outlines the cashier s checks that Mrs. Mayfield believes are hers or are most likely hers. She does NOT take responsibility for any other cashiers checks. Exhibit 4 of the Government s sentencing memorandum purportedly lists more cashier s checks used by Mrs. Mayfield yet offers no proof that she in fact was the person who wrote those checks. First, again, it appears that the bank, not the FBI, and not the US Attorney s Office produced Exhibit 4. Two different 2

3 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 3 of 12 companies, Manart, Inc. and Dat Pro Audio are incorrectly listed on Government exhibit 4 twice. This is further evidence of precisely why a forensic audit by an outside party should have been done. This is evidence of more sloppy work by Vantage Bankcorp without the data to back it up. A call to the Secretary of State of Texas could not even locate a Manart, Inc. Mrs. Mayfield has never heard of this company. Furthermore, there are no credit card statements that show these cards were in fact in Mrs. Mayfield s name. However, she did her level best at trying to remember which checks were in fact hers. The defense has no records of Mrs. Mayfield s checking accounts. The defense does not even know if the records exist. We have never been given any copies of her checking account statements or evidence that Vantage Bank tried to get them. One must remember this is the Government s burden, not Mrs. Mayfield s. Even so, she has tried to help reconstruct what she could. Mrs. Mayfield remembers paying back some of these cashier s checks but she herself has no records from so many years ago. Only an outside auditor could provide this, if at all. At this point, the defense believes if the bank did find evidence that she paid back the money, they would not share it with either party. Mrs. Mayfield NEVER admitted to $104,000 of cashier s checks at any meeting. Mr. Surovic was not even at the meeting, but defense counsel was and it s a mystery where Mr. Surovic got this information, but the others present at the meeting were Patty Terry, Phil Lesh and two lawyers for the bank from Dallas. These are the same lawyers that will not share Mrs. Mayfield s deposition in the Civil Case from March, and the same lawyers 1 The superseding information has exactly the same language. 2 This is more chicanery on the part of Vantagebank Corp and the FBI. CLEARLY Mrs. Mayfield was under federal investigation and yet, in an effort to help Jim Collins and Ms. Terry, she willingly gave her testimony in a civil suit on their behalf vouching for the bank. Did the 3

4 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 4 of 12 who refused to give defense counsel copies of the few cashiers checks Mrs. Mayfield was shown during the meeting. Mrs. Mayfield did NOT admit that the method she used to balance the Frost Bank Account was her own creation and not copied from anyone else. Again, defense counsel was at this meeting. This is not what she said. Again, the Assistant United States Attorney, who was not present at this meeting, is taking this theory strictly from the Bank and their lawyers. As has been shown repeatedly, the Court cannot rely on this representation. If the lawyers for Vantage Bank wanted to know who created this scheme, they should have had a forensic audit done like they promised at the beginning of the investigation. Again, what they have tried to do is manipulate the facts so they can get paid by their insurance company for the $817,692 outage. 3 This is simply outrageous conduct. The Government cites a 1998 CD transfer in their brief. Mrs. Mayfield was a teller in She would not have been able to move CD s around in this manner. Finally, the American Express Card was used by at least three employees of DSB. It was the regular practice of the bank to have employees buy many items on their bank Amex card. For example, Mrs. Mayfield often cooked dinners for the entire board of directors of the bank. She charged that food from HEB or Wal-Mart on her DSB American Express Card. She and Mrs. Winkler would give their cards to other Bank employees when items were needed at that bank. It s impossible without a forensic audit and depositions or interviews FBI ask the lawyer for Vantage Bank to ask Mrs. Mayfield any questions regarding this case? The defense has not received anything on this case in discovery. Only through her own investigation did defense counsel even know about this case. Vantage Bank s lawyer refused to give the defense a copy of her statement. 3 Jackie Winkler, the former owner of DSB who sold it to Jim Collins subsequently filed for bankruptcy. Clearly, he was judgment proof. 4

5 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 5 of 12 of these employees to know what was paid back to the bank.4 B. THE $817,892 LOSS Actual loss means the reasonably foreseeable pecuniary harm that resulted from the offense. U.S.S.G. Section 2B1.1, application note 3(A)(ii), cmt. N2(A). Application note 20(a)(vi) states that the loss amount should properly account for her culpability. As previously argued and shown, Mrs. Mayfield did not profit from the loss. The defense submits that Mrs. Mayfield can only be responsible for the loss she proximately caused. On page 30 of Defendant s first sentencing memo, United States v. Andrews, 600 F.3d 1167, 1171 (9 th Circuit 2010), is cited which is a proximate cause case that reversed the District Court because the Judge did not allow a defense expert to testify about proximate cause. The Government is merely speculating as to what happened over the course of years. This is treacherous territory. This Court can make a reasonable estimate of loss, but it cannot be based on a generalized loss or speculation. It must be determined with reasonable certainty. See United States v. Pearson, 570 F.3d 480, 486 (2 nd Cir 2009), citing United States v. Doe, 488 F.3d 1154, 1160 (9 th Cir. 2007). In the first sentencing hearing, AUSA Surovic stated that Mrs. Mayfield did not profit from the loss. P 13, l. 21. He also states that the merger is a share deal p. 18, l. 23. The only thing posted under her user name that is fraudulent are the cashier s checks, which she has 4 Defense counsel suggested to the AUSA that she go through the AMEX statements with her client to explain the charges but he said that would be a waste of my time and counsel should concentrate on the $830,000 loss.when a former DSB employee who had a bank issued credit card was contacted by the defense with regard to the card, this former employee denied having a card, and when shown the credit card statement with her name on it and her charges she was not willing to come forward. Defense counsel believes this is another person who is afraid of prosecution and investigation by the FBI and/or reprisal by Vantage Bank Corp. An example of the Amex statement provided by the government to the defense will be filed under seal and is 5

6 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 6 of 12 admitted to taking. How can they say the $ loss is all Mrs. Mayfield without investigating anyone else? What is even more troubling is that other bank employees, such as the bookkeepers, had to send in monthly reports and had access to Mrs. Mayfield s employee number. Over the years, people who worked in bookkeeping had access and used Mrs. Mayfield s employee number such as: Ashley Aguilar (a current VBC employee), Rebecca Robles, Stephanie Mares, Doris Schueling, Mary Bernal, and Ginny Winkler. Jackie Winkler, the owner of DSB from to 2008, had access to the maintenance software system and therefore had free reign to do anything. Moreover, high access level employees of the bank could change their employee numbers to whatever they wanted to until at least (Mr. Collins bought the bank in 2008). This was not good business practice, but this is how it was done. Mrs. Mayfield came to the position of President from working from the ground up. She learned what she knew about banking practice from her time at this bank. There were numerous, profoundly faulty business practices which is why there was an FDIC consent order and oversight from the Texas Banking Commission. The consent order was not terminated until 1/23/2014. Moreover, the bank examiners took away her lending authority in 2011 because she was way in over her head. DSB was run like a family business, not a bank. The main reason the consent order was terminated was because of the Merger. The examiners knew DSB was not making money and probably wouldn't until the two Banks merged. The examiners were not happy until a new CEO was hired in 2012, a Richard Yowell. At the December 2, 2015 sentencing hearing, Phil Lesh testified that Mrs. Mayfield attached as Defense exhibit 2-2 will be filed under 6 seal.

7 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 7 of 12 said it could have been Cash letter outages (that caused the outage)p. 45, ll 7-8, and he testified that is not what it could have been. Ms. Julie Taylor was hired by DSB to finally balance the books and she did. She states in her affidavit attached as exhibit 1-2, 5that there were significant problems with the cash letters processed by Diebold and this problem could easily have contributed to the out of balance on the Frost Account. Contrary to what the Government states in its brief, Mrs. Mayfield was not solely responsible for balancing the Frost account. Mrs. Mayfield also assigned other employees that task. It simply was never done until Ms. Taylor was hired to do it. What is significant is that Mrs. Mayfield did not benefit from this manipulation of changing the books. C. IT S MATHEMATICALLY IMPOSSIBLE FOR THE LOSS TO BE $817,892 According to the testimony of Mr. Phil Lesh, Mr. Jim Collins owned 91% of the shares of DSB before the merger and 85% of the shares of Vantage Bank after the merger. He owned nearly all of the shares of the holding company that held the shares of DSB. Now, there are 15% new shareholders at Vantage Bank (100% less 85% owned by Mr. Jim Collins). Now, the same person, Mr. Jim Collins, is the buyer and seller of that 85%. He sold DSB to Vantage Bank, and when he did, Vantage paid $817,892 more for DSB than they should have because of Mrs. Mayfield s understatement of the liabilities of DSB. Mr. Collins, as a 91% shareholder in Vantage Bank, received more consideration via new shares of acquiring bank (Vantage) because of the failure to properly state liabilities. Mr. Collins got $744, 282 (91% of $817,892) in excess stock because of the understated liability. In the acquiring bank he still had 85% of the stock; he overpaid $695,208, which is 85% of 817,892. The actual loss incurred is only applicable to the 15% ownership not owned by Mr. Jim Collins. This loss is the 15% of the 5 This exhibit will be filed under seal. 7

8 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 8 of 12 $817,892(understated liability) or $ 122,684. The proof is the difference between 817, 892(total loss) and 695,208 (Mr. Jim Collins common ownership before and after sale transactions). Put another way, as an example, lets assume Mr. Collins owned 100% of the bank that was sold and 100% of the acquiring bank, he would have gotten shares of each bank. If he got paid too much by $817,892 (something for nothing) as seller and now we ve discovered the mistake and we want you to give purchaser this $817,892. So effectively, he is being paid too much on both sides of the transaction. This is a reasonable estimate of the loss attributable to Mrs. Mayfield. Mrs. Mayfield received a letter from Vantage Bank that was sent out with a proxy statement that said there are 127,757,119 total shares of Vantage Bankcorp outstanding as of June 30 th, This is 900,926 less shares than what is shown on the second column of the impact analysis report that shows the loss of $817,892. Mrs. Mayfield and her husband currently own 62,906 shares of Vantage Bancorp Stock.6 Page 1 of the Acknowledgment of Merger 6 This.55 cents a share is taken from a letter Mrs. Mayfield received from Vantage Bankcorp as a Vantage Bankcorp shareholder September 25, 2015 signed by Guy Bodine,III, President of 8

9 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 9 of 12 Consideration, item 2 says the value per share at Vantage Bankcorp is $0.5536/share. Using this number, if Mrs. Mayfield has 62,906@.5536 per share = $34, This she intends to pay towards her restitution. Finally, one should ask, if Jim Collins knew about the $817,782 outage before he merged DSB with Vantage Bankcorp, (he bought DSB in 2008) why would he go ahead with the merger? There are many practical reasons in the business of banking that Mr. Collins would go ahead with the purchase. But again, the defense has not been able to speak with Mr. Collins or depose him. All questions are referred to his lawyers. The government is wrong when it states the entire overpayment on the part of Vantage Bankcorp was the direct result of the Defendant s misrepresentations The actual loss of $122,684 may have been worth it when considering advantages in the banking world to owning another bank. But the advantages for Mr. Collins are unknown because the FBI did not investigate this case, or if they did, Mrs. Mayfield is not aware of it.. With regard to Government exhibit 2: They have shown no evidence that any these entries were not actually good entries or corrections. For example, D'Hanis ISD used their CD many times when they needed money for payroll it other things and would put the funds back once they received money from the state. Also, Mrs. Mayfield was not the only person that moved federal funds. Entries had to be made to correct bad entries all the time. These are just theories that Vantage Bankcorp have made from things they have found posted using Mrs. Mayfield s user code. An important question is are there any other Vantage Bankcorp. 7 The Government stated in their sentencing memo "Vantage bank provided 1,477,340 more shares of vantage bankcorp shares to medina bank shares stockholders than it would have if it had known the proper equity value of Medina bankshares." This is roughly.55 a 9

10 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 10 of 12 entries like this from any other bank employee in the normal course of business? At this point we don t know because they haven't investigated anyone else, interviewed anyone else, or done a forensic audit. These entries do not prove at all any loss. They are washouts. It doesn't show where the money left the bank or that Mrs. Mayfield took it or profited from it. She did admit to the cashier s checks she took and that she hid the out of balance from them and that is what she plead guilty to and what she should be punished for. D. Restitution Restitution cannot be awarded for losses attributable to conduct outside the temporal scope of the scheme charged; the same is true for conduct not charged as part of the scheme. United States v. De Leon, 728 F.3d 500, 507 (5 th Cir. 2013) cert. denied, 134 S. Ct (2014)(restitution award vacated because it included losses before and after the times alleged in the indictment). So, [a]n award of restitution cannot compensate a victim for losses caused by conduct not charged in the indictment or specified in a guilty plea, or for losses caused by conduct that falls outside the temporal scope of the acts of conviction., 703 F.3d 318,323 (5 th Cir. 2012). The Government s own argument states that there was an outage of $380,000 by January of 2004 so even if the Court finds that Mrs. Mayfield is responsible for all $817, in loss, $380,000 of it must be subtracted because this amount is outside the temporal scope of not only the charging instrument but also the plea of guilty. However, the plea agreement clearly indicates an amount of $68, The Government is prohibited from using any time period other than that stated in the superseding information which clearly states: Beginning in 2004 and continuing through share. 10

11 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 11 of 12 September, 2014 Therefore, his mentioning 1998 in his sentencing memo is further evidence of how the employees of Vantage bank, namely Patty Terry and others, have led him to believe that Mrs. Mayfield was the mastermind behind this alleged loss. E. The Future of Laurie Mayfield Since the time of her plea, Mrs. Mayfield has found another job and is saving her salary to put towards any restitution that the Court orders. She has steadily worked towards full time employment, but has not done so without knowing the outcome of her sentencing. The alleged loss is clearly not a good measure of Mrs. Mayfield s real culpability. She did what she thought was right, even though it was terribly wrong. It s unfortunate really that as a society, we have made a choice to use the criminal justice system to regulate all manner of personal and social behavior. She admitted wrongdoing in the beginning, she accepted responsibility by pleading guilty extremely early in the case; she met with the bank multiple times then she and her lawyer met with the bank; she agreed with the Texas Commission on Banking and the FDIC never to engage in bank practices again without making them sue her civilly. She is selling what little she has to pay her attorney s fees. Mrs. Mayfield was good at what she did. She cared for her bank and her customers. That s why she hid the loss from the FDIC and Texas Commission on Banking regulators. She made a mistake. She has paid for it for years. She is paying for it now. She will pay for it in the future in numerous ways. Mrs. Mayfield respectfully asks the Court for a sentence that will allow her to continue her rehabilitation and be an asset to the community she loves and that loves her. 11

12 Case 5:15-cr XR Document 52 Filed 01/23/16 Page 12 of 12 Respectfully submitted, KIRA ANNE WEST By: /s/ Kira Anne West DC Bar No G Street N.W., Suite 500 Washington, D.C Phone: kiraannewest@gmail.com CERTIFICATE OF SERVICE I hereby certify on the 23 rd day of January, 2016, a copy of same was delivered to the parties of record, pursuant to the rules of the Clerk of Court and via . /S/ Kira Anne West 12