United States v. Coletti

MEMORANDUM OPINION AND ORDER

HONORABLE EDMOND E. CHANG UNITED STATES DISTRICT JUDGE

Back in 2019, John Coletti was sentenced to serve 30 months in federal prison for his role in a multimillion-dollar fraud scheme. R. 348, Sentencing Order.^[1] After receiving a diagnosis of skin cancer, he sought and received a series of extensions on the surrender date to undergo treatment and reconstructive surgery. With his surrender date now set for January 3, 2022, Coletti has filed a motion for compassionate release under 18 U.S.C. § 3582(c)(1)(A)(i), asking this Court to reduce his sentence to a non-custodial one. R. 444, Def.'s Mot. The government opposes the request. R. 453, Gov't. Resp. For the reasons discussed in this Opinion, the Court denies Coletti's motion.

I. Background

In October 2018, John Coletti pled guilty to one count of making a false statement, 18 U.S.C. § 1001. R. 301, Plea Agreement ¶ 5. The crime arose out of his job as a sales representative for a company called ContinuityX Solutions, which was run by David Godwin (the then-CEO, but now Coletti's co-defendant). Id. ¶ 6 at 2-3.

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ContinuityX was a computer and telecommunications services provider. Id. ¶ 6 at 3. In November 2012, Godwin asked Coletti to join a conference call and lie to Victim Company 2 about ContinuityX's cashflow, to convince the company to do business with ContinuityX. Id. First, Godwin emailed Coletti a copy of a fraudulent invoice showing that “Telecommunications Company B owed ContinuityX over $8 million.” Id. Coletti knew the invoice was false and that Telecommunications Company B did not, in fact, owe millions to Continuity X. Id. But he nevertheless agreed to Godwin's request that he join a call later that day and tell staff from Victim Company 2 that “the invoice was genuine and the money was owed.” Id. Partially because of Coletti's representations on that call, Victim Company 2, together with Victim Company 1, advanced six million dollars to ContinuityX. Id. ¶ 6 at 4. That money was never repaid, and the victim companies lost those six million dollars. Id.

David Godwin and ContinuityX engaged in other illegal dealings, and by 2013, the FBI was investigating the case. Plea Agreement ¶ 6 at 2. On July 2, 2013, Coletti was interviewed by an FBI agent in Los Angeles. Id. When the agent asked Coletti about the fraudulent invoice, Coletti falsely stated that he only learned of the invoice in 2013, even though he knew that really, he had known about it back in November 2012. Id. at 4. This false statement is the basis of Coletti's conviction under 18 U.S.C. § 1001. Id. ¶ 5.

The pre-sentence investigation report prepared by the Probation Office, which the Court adopted without changes at sentencing, includes additional details about Coletti's role in Godwin's fraud schemes. Egregiously, on two occasions, Coletti posed

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as an employee-that is, literally posed as a different person-of one of the victim companies on a phone call with another victim company to cover up the fraud. R. 316, Presentence Investigation Report (PSR) ¶ 16 (under seal); R. 349, Statement of Reasons at 4 (under seal).

On April 18, 2019, this Court sentenced Coletti to 30 months of imprisonment and one year on supervised release. Sentencing Order. In reaching this decision, the Court noted the seriousness of the crime of lying to law enforcement. R. 358, Sentencing Tr. at 25:2-14. The Court also noted, in aggravation, the seriousness of the crime that Coletti sought to cover up by lying to the FBI: a fraud that caused six million dollars in loss to two companies. Id. at 25:15-20. The Court acknowledged Coletti's lack of criminal history, and noted that he appeared to understand the seriousness of the crime and did not need much specific deterrence. Id. at 25:21-26:1. But the Court also noted that Coletti was involved in criminal conduct with Godwin for months on end, and without reluctance. Id. at 26:8-27:25. Although Coletti's role was minor in comparison to the roles of his co-defendants (Godwin and Anthony Roth), it was still “a role that was necessary to keep this scheme going.” Id. at 27:8-15. General deterrence was thus a major consideration in arriving at the sentence imposed. Id. at 27:13-23. Coletti was originally ordered to surrender for the custodial part of his sentence on January 14, 2020. Sentencing Order.

On January 9, 2020, Coletti filed the first of what would become nine motions to extend his surrender date, driven by an unfortunate and doubtless frightening diagnosis of skin cancer, and the ensuing treatment and recovery involved. R. 395.

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When the first motion was filed, Coletti was awaiting more definitive biopsy results. Id. ¶ 3; R. 397. Those results unfortunately came back positive for cancer, and Coletti filed a second request so that he could undergo surgery to remove the cancerous area. R. 400. That motion was granted to April 28, 2020. R. 402. And so on. Suffice to say that the Court continued to grant Coletti's requests as he underwent the required surgeries, which were delayed several times due to the COVID-19 pandemic. By November 23, 2020, all of the skin cancer had, thankfully, been removed, but Coletti still needed to undergo reconstructive surgeries in the wake of those excision surgeries. R. 449. In his ninth and most recent unopposed motion to extend his surrender date, filed on August 30, 2021, Coletti reported that his doctor would finish reconstructive surgeries by the end of December 2021, and asked to begin his custodial sentence on January 3, 2022. R. 479 ¶¶ 2-3. On the current record, then, it appears that Coletti is now cancer-free.

In October 2020, Coletti filed this motion to modify his sentence to home confinement. R. 444. The government opposes the motion. R. 453, Gov't. Resp.

II. Analysis

In seeking the reduced sentence, Coletti invokes 18 U.S.C. § 3582(c)(1)(A)(i). That statute permits a defendant to petition the Court to modify a term of imprisonment if “extraordinary and compelling reasons warrant such a reduction, ” and if the modification would be consistent with the sentencing factors in 18 U.S.C. § 3553(a) and the applicable Sentencing Guidelines policy statements (if any). Before petitioning the Court, a defendant must exhaust administrative remedies with the Bureau of

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Prisons (commonly known as the BOP), by first asking the warden of the defendant's facility to request the sentence modification on the defendant's behalf, and then either waiting 30 days or exhausting appeal remedies of the warden's denial within the BOP. 18 U.S.C. § 3582(c)(1)(A). In this case, the government disputes that Coletti has exhausted his administrative remedies-indeed, the government contends it is too early for Coletti to do so. Gov't. Resp. at 9-13. The government further disputes that Coletti has demonstrated extraordinary and compelling circumstances warranting a modification of his sentence, or that the § 3553 factors would justify a sentencing reduction. Id. at 13-15. The Court will address each issue in turn.

A. Exhaustion

The most difficult question presented by the motion is whether Coletti has exhausted his administrative remedies. Although the exhaustion requirement for compassionate-release motions is not a subject matter jurisdiction hurdle, it is a mandatory claim-processing rule that federal courts must enforce if invoked. United States v. Sanford¸ 986 F.3d 779, 782 (7th Cir. 2021). Coletti argued in his motion that even if the Court found that he had not exhausted his remedies, the requirement could be set aside. Def.'s Mot. at 4. After the parties finished briefing this motion, however, the Seventh Circuit spoke definitively on the issue, and there is no room for disagreement: “We have not yet directly addressed-that is, not in a published opinion- whether the exhaustion requirement is a mandatory claim-processing rule and therefore must be enforced when properly invoked. Several of our sister circuits have held

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that it is. … We agree.” Sanford, 986 F.3d at 782 (emphasis in original). So Coletti must exhaust his remedies before he can request a modification of his sentence.

The thorny issue is whether Coletti can request compassionate release before beginning to serve his sentence. The government says he cannot, while he maintains that he can. Gov't. Resp. at 9; Def.'s Mot. at 3. No. appellate court has spoken on this question yet. Nor does the statute itself explicitly address it. The Court notes, however, that the statute does not seem to preclude a request from someone like Coletti. The exhaustion requirement is set forth, in full, as follows, with special emphasis on the authorization to file a compassionate-release motion after asking the warden to do so:

The court may not modify a term of imprisonment once it has been imposed except that-in any case-the court upon motion of the Director of the Bureau of Prisons, or upon motion of the defendant after the defendant has fully exhausted all administrative rights to appeal a failure of the Bureau of Prisons to bring a motion on the defendant's behalf or the lapse of 30 days from the receipt of such a request by the warden of the defendant's facility, whichever is earlier, may reduce the term of imprisonment …

18 U.S.C. § 3582(c)(1)(A) (emphasis added). The government argues that the requirement to ask the warden to move for compassionate release means that “the plain text of the statute contemplates that a defendant seeking compassionate release is in the custody of the BOP.” Gov't. Resp. at 9. In an attempt to fulfill the exhaustion requirement, Coletti sent a letter to the warden of Federal Correctional Institution (FCI) Lompoc, where he is assigned to report, in January 2022, for his period of incarceration. Def.'s...