Chuck Rizzo Sentencing Memo For Macomb Co. Corruption Scandal

2:16-cr-20732-RHC-RSW Doc # 181 Filed 04/19/18 Pg 1 of 40 Pg ID 1681
UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
UNITED STATES OF AMERICA,
CRIMINAL NO. 16-20732

vs.
HON. ROBERT H. CLELAND
D-7 Charles B. Rizzo,
Defendant.
/
Defendant’s Supplemental Memorandum

Regarding Sentencing
Charles B. Rizzo hereby submits this supplemental memorandum to address the assertion,
made for the first time in the government’s Sentencing Memorandum, that Rizzo should be
sentenced to 75 months because he is more culpable than the corrupt politicians he helped build
cases against. This new position is surprising. Defense counsel sought to limit the number of
disputes at sentencing by sharing the relevant portions of Rizzo’s Motion for a Below-Guidelines
Sentence, Doc. 173, with the government before filing that Motion. The government identified
points where there would be disagreement, and defense counsel made changes where it was
possible to head off unnecessary disputes. Had the government said it took issue with Rizzo’s
statement that he was not the one who initiated the bribery and was not the most culpable, Rizzo’s
Motion would have included the points that he makes in this document. Because of the importance
of the government’s unexpected new assertion, Rizzo submits this supplemental memorandum and
supporting materials now, rather than waiting until Monday’s hearing to make these items and
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points available to the Court.
To the knowledge of the undersigned counsel, this is the first time in the long history of this
matter that the government has taken the position that it sought and obtained cooperation in
January 2016 from the most culpable participant in the Macomb County public corruption scheme.
The government’s suggestion is surrounded by unjustifiably aggressive language that depicts Rizzo
as a one-man crime wave who deliberately embarked on a plan to corrupt numerous politicians to
enhance his business. As a preliminary observation, there were at least 300 elected township and
county officials in the communities that chose Rizzo’s former businesses to service their waste
collection and disposal needs. The government’s case involves defendant’s association with only
four of them, under circumstances bearing little relation to the vituperative prose in the
government’s filing.
The government newly contends in its Sentencing Memorandum that Rizzo was the
“central figure” who “play[ed] the leadership role” in the public corruption that is the subject of
their investigation, Doc. 178 at 19, and the government further suggests that this is the rare case
where the bribe payer is more culpable than the dirty politicians, id. at 1. Relatedly, the
government tries to portray Rizzo as the instigator of some (but not all) bribe payments. Id. at 7.
The government’s present description of Rizzo is difficult to comprehend. Rizzo did not
approach these officials with the intent to bribe them. The government knows, for a fact, that these
officials approached Rizzo with their requests for help. Had they never made contact with Rizzo,
the course of events would be drastically different. All of this is undeniable. In fact, the
government is on record admitting that Rizzo was neither the instigator of the bribery activity to
which he pled guilty, nor the driving force behind a pattern of historical corruption in southeast
Michigan. During 2016, the government on several occasions, without solicitation, observed that
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Rizzo was not the cause of corruption in Macomb County; rather, he got caught up in something
that others—crooked politicians like Reynolds and Lovelock—started or perpetuated.
For example, on February 22, 2016, in a meeting with Rizzo and his lawyers, Assistant
U.S. Attorney Michael Bullotta stated that “public corruption existed long before [Rizzo] came
along and has largely been unabated.” Exhibit 1 (first page of meeting notes). He added that the
government “couldn’t find a hole in Macomb before now to break into corruption.” Id. Then, on
March 11, 2016, Mr. Rizzo’s attorney, Michael Lavoie, recounted praise from FBI agent Robert
Beeckman who “talked about what a great job [Rizzo] did with Dean [Reynolds],” especially
because he got Reynolds to talk about others unconnected to Rizzo who were part of the corruption
problem in Macomb County. Exhibit 2 (recounting “particularly the reference Dean made to other
names”).
Later during the investigation, one week after the government charged the first politician
(Reynolds), and a few days before it would charge the second (Clifford Freitas), AUSA Bullotta
told David DuMouchel, who was then serving as Rizzo’s counsel, that “Chuck did not start this
[i.e., the corruption] in Macomb; he did not come up with the system out there, but got caught up
in it; he did some things wrong, but the system was not his.” Exhibit 3. This happened October
20, 2016. The government made other, similar statements in person to Mr. Rizzo and his
attorneys. For example, after Reynolds’s indictment, and the media discovered Mr. Rizzo’s
involvement, Agent Beeckman told Rizzo that his cooperation generated several new leads that did
not implicate him. Rizzo relayed the details of the call to his attorneys, writing “Bob was very
respectful and again stated all my efforts have helped them beyond what they ever thought, in
terms of people also now calling and helping them with several other leads totally unrelated to
Rizzo or me or my family, resulting from the media hurricane over the past few weeks.” Exhibit 4.
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If the government agents and attorneys somehow concluded during the course of Rizzo’s
extensive and valuable cooperation that he was really the central figure, they surely would not have
been so complimentary about his assistance. As another example from earlier in the investigation,
Rizzo’s attorney (Lavoie) reported to Rizzo a call from agent Beeckman: “Bob just called me
solely for the purpose of telling me what a ‘great’ job you are doing. He stressed that both he and
the US Atty office are very pleased with the job you are doing. The conversations have been
excellent and they could not be better.” Exhibit 5.
Also notable is that this praise came after Rizzo told the government the same things he
includes in his sentencing Motion: that Reynolds and Lovelock first approached him asking for
money, not the other way around. The government’s Memorandum does not refute those facts or
the related details set forth in Rizzo’s Motion (which, again, were shared with the government
before Rizzo filed his Motion). But the government now says there are other examples where
Rizzo may have approached politicians with the ideas of payments. That is also wrong.
First is Brent Harris. The government learned about Harris only because Rizzo told the
agents about payments that Harris sought and received from Rizzo. Rizzo eventually cut off
contact with Harris. That is why the government’s undercover investigation could not get to Harris
by having Rizzo try to contact him. The government needed to find another way. That other
way—which Rizzo helped devise—was to have the undercover agent persuade Reynolds to
introduce the agent to Harris. (Reynolds was the one who had connected Rizzo with Harris years
earlier.)
Second is Freitas. According to the government, Rizzo sought out Freitas with the goal of
hiring an employee who would later help win a contract. This is not true. Ray Hernandez, an RES
employee, brought Freitas to Rizzo’s attention and suggested that Rizzo hire Freitas. Exhibit 6.
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Freitas’s resume, submitted to Ray Hernandez, shows Freitas appeared qualified for the assistant
manager position he received because he had worked as a project manager. Exhibit 7. As
explained in Rizzo’s sentencing Motion, Freitas later told Quint Ramanauskas that he (Freitas)
wanted a bonus if he could help land the Macomb County contract. This payment was a loan,
which Freitas repaid in early January 2016, before Rizzo began cooperating. Then, as a
cooperator, Rizzo helped the government make its case against Freitas by agreeing to pay him part
of the money he wanted (that is, converting it from a loan to a gift). The wiretap calls from 2015
also corroborate Rizzo’s frustration with Freitas’s requests and show how Freitas was pushing the
idea to be paid for unlawful conduct. Exhibit 8. Rizzo has admitted he paid bribes to Freitas, but it
is wrong to equate that fact with the unsupported assertion that Rizzo was somehow the instigator
of, or central figure in, a sprawling bribery scheme.
The government’s Sentencing Memorandum also seems to make the invalid assumption
that because Rizzo embezzled money (actions he freely admits), he must have been the one to
instigate the bribery. Doc. 178 at 3. If that is the government’s point, it is a non sequitur.
Moreover, the government knew that Rizzo had embezzled from RES when he began cooperating.
The government had proof of it, and Rizzo admitted he did so.
Finally, when evaluating the significance of the government’s claims that Rizzo’s
embezzlement victimized Kinderhook and even the Boy Scouts of America, the Court needs to
keep the full set of facts in mind. While there is no excuse for embezzling, the fact remains that, as
explained in Rizzo’s Motion, Kinderhook and its investors profited substantially from the sale of
the Rizzo waste company. In fact, as measured by the leading investment indexes, Rizzo created
an annualized rate of return that was about twice expected market returns. Exhibit 9.
To be clear, Rizzo is not asking the Court to take mitigation factors and use them to excuse
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his crimes or turn him into the victim. He admits he broke the law. There are no excuses—nor
does he seek to make any—for what he did. He is not a victim and does not deny that his crimes
imposed harms on the real victims. He does not deny taking money that belonged to Kinderhook
and its investors. Instead, he asks the Court to consider the full set of facts, which distinguish this
case from others. As another example, he admits that he obtained improper help from politicians
through payments that also were necessary to prevent the likes of Reynolds and Lovelock from
harming his chances at winning that business. That is why, before Rizzo began cooperating, the
government heard him say, in wiretapped calls that the government’s Memorandum quotes, that
Reynolds was a “shakedown artist,” and that their relationship was “love/hate.” Doc. 178 at 4-5.
Rizzo has argued nothing inconsistent with those facts by submitting that he could have—and
likely would have—won the contracts if all of the township officials he encountered had been law-
abiding. That fact (along with others already addressed in Rizzo’s Motion and to be discussed
further at the hearing) creates a favorable comparison between him and several defendants who
routinely have received sentences of below five years despite engaging in conduct no less
aggravating than that here and despite receiving no cooperation credit.
Respectfully submitted,
s/David Debold
P39278
Gibson, Dunn & Crutcher LLP
1050 Connecticut Ave., N.W.
Washington, DC 20036
(202) 955-8551
Dated: April 19, 2018
s/Thomas C. Green
Sidley Austin LLP
1501 K Street, N.W.
Washington, DC 20005
(202) 736-8069
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CERTIFICATE OF SERVICE
I hereby certify that on April 19, 2018, I electronically filed the foregoing document with
the Clerk of the Court using the ECF system which will send notification of such filing to the
following:
David Gardey
Assistant U.S. Attorney
s/David Debold
Attorney for Defendant
DATED: April 19, 2018
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Chuck Rizzo Sentencing Memo For Macomb Co. Corruption Scandal

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2:16-cr-20732-RHC-RSW Doc # 181 Filed 04/19/18 Pg 1 of 40 Pg ID 1681

UNITED STATES DISTRICT COURT

UNITED STATES OF AMERICA,

CRIMINAL NO. 16-20732

Defendant’s Supplemental Memorandum

points available to the Court.

that others—crooked politicians like Reynolds and Lovelock—started or perpetuated.

excellent and they could not be better.” Exhibit 5.

manager position he received because he had worked as a project manager. Exhibit 7. As

of, or central figure in, a sprawling bribery scheme.

aggravating than that here and despite receiving no cooperation credit.

DATED: April 19, 2018

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