Tuesday, December 1, 2020

Former Jacksonville City Council members set for sentencing in fraud case

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Former Jacksonville City Council members Katrina Brown and Reggie Brown are scheduled to be in federal court Tuesday to begin a hearing on their punishment for dozens of fraud convictions.

Up to three days of witness testimony and lawyers’ arguments could unfold before U.S. District Judge Marcia Morales Howard imposes sentences on the pair.

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A jury found the two guilty almost 13 months ago of charges including mail and wire fraud, money laundering and conspiracy that involved misusing federally backed loan money and a city grant for a failed factory project once expected to add jobs in a struggling neighborhood.

The case did not involve their actions as council members, but prosecutors argued they deserved stern treatment because of their positions.

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“Local government leaders and those aspiring to lead have a legal, ethical, and moral obligation to conduct themselves within the bounds of the law and operate beyond reproach. Katrina Brown and Reginald Brown failed to do that,” Assistant U.S. Attorney Tysen Duva argued in a sentencing memo last month.

“Instead, they illustrated their felonious-level sense of entitlement by stealing federally-backed and city of Jacksonville … funds that originated from taxpayers,” Duva wrote. “… When local politicians engage in such behavior, society expects courts to imprison them.”

Both Browns, who are not related, were on the council when they were indicted and suspended from office in 2018.

Katrina Brown, who touted her business acumen when she ran for office, had been handling invoices and payments for a $2.65 million small-business loan her restaurant-operating family took out to build a factory for their signature product, Jerome Brown BBQ Sauce.

The factory conversion planned at an old Commonwealth Avenue warehouse was never completed. The family company handling the loan, CoWealth LLC, eventually defaulted on its payments and lost the building.

Instead of a simple business failure, the loan became a criminal matter when prosecutors said Katrina Brown had responded to business setbacks by filing bogus invoices so the lender, New Orleans-based BizCapital Bidco I, would release draws from the loan money.

Investigators testified at the trial about invoices that led the lender to send payments to two businesses Reggie Brown controlled, A-Plus Training and RB Packaging – and that the money was split between the defendants later. 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.

Although both politicians had court-appointed attorneys during the trial – Katrina Brown represented herself, with her lawyer standing by if needed – they both hired private attorneys ahead of the sentencing.

The defense lawyers have argued for probation, with Katrina Brown’s attorney, Curtis Fallgatter, telling Howard that his client used the loan money to try to keep the company in business.

“That utilization of the funds is the antithesis of fraud,” Fallgatter wrote in a sentencing memo that said Katrina Brown “worked incredibly hard to make this business a success.”

Besides trying for probation, defense lawyers have been seeking to delay the sentencing hearing until the risk of coronavirus exposure is lower. Last month, Howard scheduled Tuesday through Thursday for the sentencing hearing, where arguments about details of each count can affect sentence lengths.

In a court filing Monday, Fallgatter spotlighted recent record numbers of new diagnoses nationally and argued that holding the hearing Tuesday “will create a potential ‘superspreader’ event.”

The season for waiting may be finished, however.

The sentencing has already been rescheduled six times, for reasons ranging from changes in attorneys to pandemic precautions and a scheduling conflict with the later-canceled Republican National Convention in Jacksonville.

This month, Howard issued an order that found “an in person hearing can be conducted safely at this time,” fixing the date for the last stages of the case to finally happen.

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