Former Jacksonville City Council member Katrina Brown must serve 33 months in prison and her council colleague Reggie Brown will serve 18 months for dozens of felony convictions, a federal judge said Thursday.
U.S. District Judge Marcia Morales Howard ordered Katrina Brown to pay $425,334 in restitution and said Reggie Brown owed $411,752 for his part in a series of frauds that grew out of a doomed plan to open a barbecue sauce factory with a federally backed loan.
“This offense occurred because of Katrina Brown and her decisions. She devised the scheme … she knew that it was wrong,” the judge said.
The pair were convicted last year of crimes including mail and wire fraud, money laundering and conspiracy for actions that were separate from their roles as council members.
The judge underscored the separation as she explained her sentence, saying that “the defendants’ positions did not in any way facilitate the offense.” There are provisions for harsher sentences in cases involving public corruption, she noted.
The two misused money from a federally backed small-business loan and a City Hall grant that had both been intended to help Katrina Brown’s restaurant-operating family build a plant to mass-produce their signature product, Jerome Brown BBQ Sauce.
But the loan and terms for the grant had been negotiated before Katrina Brown was elected to office in 2015, and Howard said “there’s just no evidence that either defendant used their public office for personal gain.”
Both prison terms were lighter than sentencing guidelines that judges consult as recommendations, and which prosecutors had urged her to follow.
Assistant U.S. Attorney Tysen Duva expressed disappointment with the sentences, telling the judge that the term ordered for Reggie Brown was shorter than guidelines would have recommended if the politician had pleaded guilty and accepted responsibility for his crimes.
There was disappointment from the defense too, with Katrina Brown’s attorney, Curtis Fallgatter, telling Howard he expected an appeal might be filed.
Both he and Reggie Brown’s attorney, Alan Ceballos, had argued for probation, but Howard was firm about her decision, saying Thursday that “nothing less would be sufficient.”
Katrina Brown, who touted her business acumen when she was elected in 2015, handled invoices and payments for a $2.65 million small-business loan her family took out to build the barbecue sauce factory.
Katrina Brown’s family businesses, CoWealth LLC and Basic Products, LLC, had envisioned millions of dollars in revenue from sales to retailers including Sam’s Club and Winn-Dixie when the loan was negotiated in 2011.
But few orders materialized and the Commonwealth Avenue warehouse that was bought was never fully converted to a factory.
Despite that, Katrina Brown filed a string of invoices seeking payment from the company handing the loan for work by two companies controlled by Reggie Brown, A-Plus Training Consultants and RB Packaging.
Showing that the work wasn’t done was a key part of the trial last year that ended with Katrina Brown convicted of 37 criminal counts and Reggie Brown convicted of 33. During that trial, an FBI accountant told jurors that about half of the $286,000 Reggie Brown’s companies received between 2013 and 2015 ended up being sent to Katrina Brown or her family’s business, which was the basis for the money laundering charges.
Howard said she believed Katrina Brown sought the loan from New Orleans-based lender BizCapital Bidco I with good intentions but was simply unprepared to run a manufacturing business.
“Ms. Brown wanted to take her father’s … barbecue business to the next level,” the judge said. “She wanted to make it a big, successful company for herself and for her family. She was proud of it. She worked hard. … And she failed.”
Howard credited Katrina Brown with putting much of the money from the invoice scam back into her family’s business, but said that didn’t absolve her of having defrauded the lender.
“You knew it was based on a lie”
The judge said Reggie Brown was less culpable, commenting at one point that “he’s only in this courtroom and in this case because of Ms. Brown.” Howard later said that comment hadn’t been meant to suggest Reggie Brown was blameless, however, only that Katrina Brown had conceived of the scam and recruited him into it.
She said Reggie Brown appeared to be a man with a moral compass, but one who had ignored its guidance when he received payments for work he knew hadn’t been done.
“Each and every time you received a check, you knew it was based on a lie,” Howard said. “…And you chose to deposit the check, give some of it to Katrina Brown, and keep some of it.”
She said granting probation for that conduct “would undermine the rule of law,” and that some incarceration was necessary.
Where either defendant will serve their prison time wasn’t settled Thursday.
Both wanted to be close to family in Jacksonville, and Howard said that request would be relayed to the federal Bureau of Prisons. She told defense lawyers to alert her if their clients don’t receive instructions on a place and date to report to begin their terms but allowed them to remain free until then.