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United States v. Johnston

United States District Court, E.D. Kentucky, Central Division, Lexington

September 12, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
SETH JOHNSTON, Defendant.

MEMORANDUM OPINION

JOSEPH M. HOOD, District Judge.

This matter is before the Court upon Johnston's revised objections to the presentence report. On August 8, 2014, Johnston filed his revised objections, [DE 89], and on September 2, 2014, the government filed its response, [DE 90]. On September 4th and 5th, 2014, the Court conducted a hearing on the matter during which the government presented witnesses and the Defendant testified. At the conclusion of the hearing, the Court announced its ruling from the bench, that the presentence report calculations are supported by the evidence. This opinion supplements the Court's reasoning for that ruling.

I. Background

On October 30, 2013, Johnston pled guilty to Counts 1-6 of the Information. As factual bases for each of the pleas, Defendant agreed to each of the following facts:[1]

A. Count 1: Fraud against the plaintiffs in Abbott et al v. Chesley et al.
(a) Johnston admits that, from approximately 2008 and continuing through 2010, in Fayette County, in the Eastern District of Kentucky, and elsewhere, he devised a scheme to defraud the plaintiffs in Abbott et al v. Chesley et al., by diverting checks collected for purposes of satisfying the judgment obtained for their benefit, and instead utilizing the checks for his personal benefit.
(b) Johnston admits that, in furtherance of his scheme to defraud, Johnston was responsible for helping to collect checks, which were mailed or electronically deposited, from Symetra Financial and The Hartford pursuant to an Order of Garnishment for specific assets of William J. Gallion. Johnston admits that, on numerous occasions, Johnston deposited checks mailed to his law firm pursuant to the Order of Garnishment for the benefit of the plaintiffs, and then withdrew funds from the account and used the funds for his own personal benefit. In total, Johnston admits that he diverted approximately $14, 963.05 in funds from checks sent from Symetra Financial and The Hartford pursuant to the Order of Garnishment, and instead, used the money for his own personal use and benefit. Johnston admits that his knowing concealment of his receipt of these funds was material and caused a loss to the victim or victims.
(c) Johnston specifically admits that, in or about May, 2010, for purposes of advancing, furthering, or carrying out the scheme, he caused a check to be delivered by the Postal Service, or by any private or commercial interstate carrier, or took or received any such matter therefrom, to wit, a check in the amount of $688.76 mailed from Symetra Financial to Miller & Wells, PLLC, pursuant to an Order of Garnishment for specific assets of William J. Gallion. Johnston admits that, in furtherance of his scheme to defraud, he failed to disclose his receipt of the check to Ford, Ball, or the plaintiffs, and instead misappropriated the proceeds of the mailed check for his own personal benefit.
B. Count 2: Fraud Against the Estate of Cecil Rowlett
(a) Johnston admits that, in or about 2010 and continuing through 2012, in Fayette County, in the Eastern District of Kentucky, and elsewhere, that he devised a scheme to defraud and to obtain money or property by materially false and fraudulent pretenses, representations and promises from the estate of Cecil Rowlett. Cecil Rowlett, a resident of Harlan County, KY, passed away in 2009.
(b) In 2010, Johnston was hired to represent the estate by Brett Rowlett, the executor of the estate. As part of his duties in representing the estate, Johnston was responsible for helping to identify and distribute the assets of the estate in accordance with the decedent's last will and testament and with the order of the Harlan County District Court, Probate Division. The defendant's last will and testament left inheritances to specific individuals in the total amount of approximately $200, 000, with the remaining portion of his estate passing to his grandchildren through the laws of intestate.
(c) Johnston perpetrated the scheme to defraud Cecil Rowlett's grandchildren, the residual heirs of his estate through the laws of intestate, by hiding assets of the estate and diverting the money for his own benefit and for the benefit of the executor of the estate, Brett Rowlett. In furtherance of his scheme to defraud, Johnston admits that he represented to Rowlett's grandchildren and to the Harlan County District Court, Probate Division, that Cecil Rowlett's estate contained cash assets of approximately $731, 601.38, when Johnston was aware that, in fact, the estate consisted of more than that, the exact amount of which is in dispute. Johnston admits that he utilized the additional cash assets that were not reported to the Harlan District Court, Probate Division, or the grandchildren of Cecil Rowlett, for his own benefit and for the benefit of Brett Rowlett, the executor of the estate.
(d) Johnston admits that, in or about October of 2010, for purposes of advancing, furthering, or carrying out the scheme, Johnston deposited or caused to be deposited any matter to be sent or delivered by the Postal Service, or by any private or commercial interstate carrier, or took or received any such matter therefrom, to wit, a Motion for Partial Distribution of the estate of Cecil Rowlett, with the Harlan County District Court, Probate Division. Johnston admits that the Motion for Partial Distribution contained false representations and that its mailing assisted in ...

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