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UNITED STATES v. SODANO

August 27, 1993

UNITED STATES OF AMERICA
v.
MICHAEL SODANO



The opinion of the court was delivered by: JOHN F. GERRY

 GERRY, Chief Judge

 Michael Sodano pled guilty on July 31, 1992 to Count Two of an indictment No. 91-116, charging that he, in his capacity as an employee of Dover General Hospital, removed from the hospital x-ray film having a value of at least $ 5,000 and sold it for his own profit. Sodano also pled guilty on the same day to a one-count information, charging that he accepted and agreed to accept money from Rickey Delasandro, intending to be influenced and rewarded in connection with the sale of x-ray equipment and the award of service contracts having a value of $ 5,000 or more in connection with business transactions between Community Medical Hospital and Apple Medical Systems. Both of these acts violated 18 U.S.C. § 666. Although Information No. 92-427 charged defendant with taking bribes and kickbacks, the parties have stipulated that the relevant guideline provision is § 2B1.1, dealing with theft, embezzlement, receipt of stolen property and property destruction. See Addendum to Plea Agreement with Michael Sodano, Schedule "A". The parties are before the court to resolve a dispute as to the extent to which Sodano's offense level should be increased due to the loss sustained by his victims, Dover General Hospital and Community Medical Hospital.

 A. Burden of Proof

 There is an initial dispute as to who bears the burden of proof. The Government argues that Sodano has a burden of "showing that [the presentence report figure] is materially false," and that, in the absence of such a showing, this court should accept the presentence report. See Government's Letter of March 1, 1993 at 3 (citing United States v. Badaracco, 954 F.2d 928 (3d Cir. 1992); United States v. McDowell, 888 F.2d 285 (3d Cir. 1989); United States v. Asper, 753 F. Supp. 1260 (M.D. Pa. 1990), aff'd, 941 F.2d 1203 (1991); United States v. Taxacher, 902 F.2d 867 (11th Cir. 1990)). This is misleading. The leading case on this issue in the Third Circuit, United States v. McDowell, does place a burden on the party challenging a conclusion in the presentence report, but this is only a burden of production, to produce "evidence that tends to indicate that the report is incorrect or incomplete." United States v. McDowell, 888 F.2d at 290, n.1. The defendant Sodano has met this burden of production in the evidentiary hearing. The McDowell court holds, however, that the burden of "ultimate persuasion should rest upon the party attempting to adjust the sentence. Thus, when the Government attempts to upwardly adjust the sentence, it must bear the burden of persuasion." Id. at 291. See also United States v. Badaracco, 954 F.2d 928, 935 (3d Cir. 1992). Here, the Government is the party seeking to establish that the base level of four should be increased by an established loss, and therefore under McDowell the Government must bear the burden of proof. Contrary to the Government's position, the presentence report in itself creates no presumption of correctness that the defendant must overcome, and the cases do not so hold. Therefore, we find that the Government has the burden of showing the loss sustained by the victims by a preponderance of the evidence.

 B. Calculation of Loss

 There are three separate incidents that the court is being asked to consider in enhancing Mr. Sodano's sentence. The first, and most straightforward, involves the theft of x-ray film from Dover General Hospital that occurred during the years that the defendant was employed by Dover General. The dispute involves the proofs regarding the amount of film Sodano stole during his tenure at Dover General, since the value of the film stolen depends upon the amount stolen. The second and third incidents involve Sodano's activities at Community Medical Center. The first of these involves a sale by Community Medical Center of used medical equipment to Apple Medical Systems. The Government contends that the equipment was sold for $ 39,500.00 less than fair market value, and that this difference should be considered to be a "loss" to Community Medical Center for purposes of increasing the defendants offense level. The third incident involves kickbacks that Sodano received from Apple Medical Systems for suggesting to officials at Community Medical Center that Apple should be awarded a contract to service medical equipment. The Government contends that the bribes and kickbacks also represent a "loss" to Community Medical Center that should be used to enhance Sodano's sentence under § 2B1.1.

 1. X-Ray Film Theft at Dover General Hospital

 While employed at Dover General Hospital, Michael Sodano stole an indeterminate amount of x-ray film from the Dover General supply room and sold it to Lester Kurylo. The Government argues that the court should accept the presentence report calculation of $ 96,000 as the loss attributable to Sodano's thefts at Dover General. They support this figure in two ways. First, the Government argues that the defendant's own statements quoted in the presentence report and recorded in a taped conversation with an informant support the $ 96,000 figure; second, it argues that figures compiled showing an increase in the cost of x-ray procedures for the years during which Sodano was employed at Dover General can be extrapolated to establish an amount of loss greatly in excess of the $ 96,000 figure arrived at in the presentence report.

 The Government relies on the following statement by Sodano:

 
The overwhelming majority of the film which I unlawfully removed from Dover occurred in 1983, 1984 and 1985. During this time period, Kurylo paid me approximately $ 10,000 to $ 12,000 each year. Beginning in 1985, my removal of film practically ended due to the investigation that occurred at St. Barnabas Medical Center which ultimately resulted in the arrest of one of its employees for the theft of x-ray film. Thus, between January 1986 and the end of my employment at Dover General in January 1988, I removed no more than seven cases of x-ray film totalling approximately $ 800 per case. By January 1987, I stopped stealing film from Dover General. I received approximately $ 2,800 from Kurylo for this film, which represented 50% of the film's value.

 Amended Presentence Report, p.8, P 35. The Government argues that this statement supports a finding that Sodano received $ 12,000 per year from Kurylo for a period of four years, or a total of $ 48,000. Since Sodano also stated that this amount represented 50% of the film's value, the Government argues that Sodano can be charged with a $ 96,000 loss to the hospital. The Government also points to a transcript of a taped conversation between Sodano and Kurylo (by then a Government informant), in which Sodano acknowledges that he may have received between $ 12,000 and $ 15,000 in a year from Kurylo.

 We disagree that the quoted statements establish a $ 96,000 loss to Dover General. Sodano's statement in the presentence report only establishes that he received between $ 10,000 and $ 12,000 for the years 1983, 1984 and 1985, and that he received a further $ 2,800 between January 1986 and January 1988. While Sodano's statement could establish a profit of anywhere between $ 30,000 and $ 36,000 for the years 1983 through 1985, the higher figure is supported by Sodano's taped statement to Kurylo in January, 1990. Therefore, ...


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