Legal

Department of Justice SealI have retained the below full description of my legal circumstance for posterity. It’s a long read, but if you’re curious about my little trip to Federal Prison, this will answer your questions.Note that the original was written in preparation for my self-surrender, so the verb use isn’t appropriate anymore.


At the end of one’s life, they expect to look back and count a small handful of days that served as crossroads, turning points, or otherwise significant moments that could inspire the classic line, “my life was changed forever.” June 15, 2012 will forever be one of those days for Chris Sigler. This quiet Friday morning in downtown Dallas, he was given a thirty month sentence by the Federal court in the Northern District of Texas.

Some of his friends and family may find this news as a shock, while others may have been in attendance at the sentencing itself. Some may just know roughly that he had “a legal matter” that was in progress, and still others may only slightly recall a career-shifting hiccup back in 2009.

The Back Story

For the benefit of all of the above, and to prevent there being any confusion, it might be best to start at the beginning. This will be as brief as possible without sacrificing continuity or precision, but almost a decade of events is covered here.

Moving to DFW

After growing up in central Texas and attending Bible school for a year, Chris was offered a job while in a chat room in March 2003. The man who hired him said his company did telecommunications. Chris was gloriously ignorant of the industry (or any other, for that matter) at the time, so he assumed that meant the same thing as telemarketing. He later said it inspired images of him wearing a headset and interrupting America’s dinner plans with inconvenient sales calls.

Chris’ new boss flew him to DFW and set him up in a local hotel as a temporary housing situation. The “big city” appealed to Chris, and the prospect of having a “big city” job was even more attractive. With the income he would be able to earn, he anticipated he could pay off his debts and return to Bible college.

Telecommunications

Chris learned very quickly that, while his job was primarily sales, his company was not in telemarketing. This new employer had a small consulting firm that claimed to teach people how to become a profitable phone company by leveraging a system devised under the inspiration of the owner’s decades of industry experience. In furtherance of that consulting concept, the company had a few residential and business phone customers that supposedly served as a proof-of-concept to demonstrate this system’s viability.

Chris’ job was to field and place sales calls for both this consulting firm and the attached local telephone service. His employer began teaching him the basics of the phone industry, or at least enough of it to sound intelligible when handling sales calls. Most of the consulting calls came in from ads placed in the Internet, whereas phone service leads were provided to Chris in list form (for outbound calls) or were driven by billboard or newspaper ads (for incoming calls).

Matt Simpson

Chris’ new employer met him at the airport with the company’s second-in-command, a guy who was a year younger than Chris named Matthew Simpson. To Chris, this guy seemed to have things together for his age. He had a mortgage and a nice car, he spoke from a wide array of career experiences from mechanic work to his new focus on telecommunications. He had some background in programming “back in the day” and seemed to know everything Chris’ new employer knew and more.

Matthew had previously had a couple roommates, but one of them just moved out. So, Chris’ new employer convinced Matthew to let him have the newly-available room. So began what Chris considered for years to be a good friendship.

Professional Programming

This job also provided Chris’ first professional programming opportunities. He had built a few websites over the years (some he now considers shamefully bad), but never with any serious functionality. Matthew instructed Chris to make updates to a pair of lead generation forms, and this introduction to PHP proved invaluable toward helping Chris get his feet wet in the programming field. This additional workload for an underperforming salesman in 2003 provided the catalyst for a career path that has continued since.

Parting Ways

Sometime around late 2003 Matt started telling Chris that he’d hired a private investigator to research their employer. The company was preparing to relocate to Nevada, which was, according to Matt’s information, because the employer’s vendors, clients, and even the State of Texas were forcing him to do so because of his shady business deals. Apparently, the employer had a long history of racking up bills and failing to pay them.

This was when Matt proposed that he and Chris cut ties with this employer and go their own way. He told Chris he couldn’t pay him yet, but Matthew would provide free room and board in exchange for Chris’ work. At this point, Chris was becoming proficient at coding, and his time and energy would be valuable to Matthew’s new business.

In early 2004, Matthew and Chris officially parted ways with their employer by sending an email that explained their willingness to continue to service clients under a new company Matthew had started called TxLink Networks.

Chris’ First Mistake

Matthew wanted to get a CLEC license for the State of Texas so he could offer local phone service as a proof-of-concept for his recommendations and a test bed for his ideas. A CLEC is a special type of phone company that is often defined by its distinction from an ILEC. The ILECs are the regional monopolies like SBC or GTE (AT&T & Verizon now), so CLECs are effectively the smaller phone companies.

Matthew explained to Chris that part of the process for getting a CLEC license was to send in an application to the Public Utilities Commission. He stated that the application was not likely to be approved if Matthew was the only one who signed it, so he asked Chris to sign a page on it as the “General Manager” of TxLink Networks. Chris’ title was not General Manager, though his title was not very solidified in this three-person company. Each employee filled a number of roles in such a small company, so their titles varied as well.

Nonetheless, that decision would come back to haunt Chris later.

The New Job Initially

Chris’ new job pretty much consisted of selling, supporting, and handling the day-to-day customer service of TxLink’s Virtual ISP product. The idea was that they bought dialup Internet services from wholesale providers and resold them to TxLink’s own customers in bulk. They provided a few value-added services such as hosted email, hosted Radius (what says “yes” or “no” when a user enters their username and password), a local dialup number finder, and a toll-free number for users that didn’t have a local number.

That toll-free dialup number would later become vital to the outcome, so additional context could be helpful.

If you call 1-800-DOMINOS within the US, you’ll get roughly the closest Domino’s Pizza to you. This is done by using a feature called “routing” that lets calls to a toll-free number be sent to a certain number (called a “ring-to” number) based on the area code and prefix (the first six digits) of the caller’s number, which were roughly geographically assigned.

So, TxLink’s toll-free dialup number worked in the same manner. When someone set up their dialup Internet connection on their computer, they tried to find a local dialup number first. If one wasn’t available, they entered 1-866-663-3679 as the phone number. When their phone line called that number, TxLink’s toll-free vendor would route the call through a method called “0110 routing” based on the user’s phone line’s number (search for “0110” on this page to see TxLink’s then-vendor talking about it).

Chris’ interaction with this toll-free number took the form of re-routing and troubleshooting. If one of the “ring-to” numbers went down, Chris would look up an alternate number in the area using TxLink’s local dialup number finder tool and then copy & paste that into an email to their vendor (the one referenced in the link above). Chris never knew (and still doesn’t know) how things were executed by the vendor, but his role consisted of sending emails like this (an actual email sent from November 15, 2005):

Please update tfn 866-663-3679 as follows:

LATA 721:
    Please set the ring-to to 702-988-0101 routed 0110 only.

LATA 973:
    Please set the ring-to to 760-702-3007 routed 0110 only.

Thanks!

At a glance, this may look pretty complicated for the uninitiated, but LATA is just a term (an abbreviation specifically) used for geographic regions. So, think of it like saying “Area Code 214”. The “0110” was a particular type of routing that meant, as Chris understood it, routing it as a local call. The “highly technical” work Chris did for this was simply sending these emails when people complained that the number wasn’t working in a certain area.

TxLink Branches Out

Over time, the dialup Internet industry began its death spiral, and Matthew began efforts in the wholesale Voice over IP realm (selling to Vonage-like service providers much like he had done with dialup). Matthew instructed Chris to build a software platform that provided a variety of functions for Matthew’s customers, such as listing their phone numbers, ordering new ones, and other basic management. Chris was never completely certain how the full operation worked, but Matthew provided Chris a basic template to follow, and Chris simply repeated the process.

Several months later, Matthew made some arrangements to sell some portion of his business to another provider called CommPartners. Matthew indicated that under this arrangement, Chris would become a work-from-home employee of this new company. He would still do the same job he had been doing to date: continuing to service their diminishing dialup customers and ongoing work on this software platform for Matthew’s VoIP customers. Matthew was to remain as Chris’ direct supervisor, and things were to remain essentially the same.

The Faulkner Fiasco

At some point, Matthew began doing additional work with one of his VoIP customers called Union Datacom. This client was operated by a man named Mike Faulkner, and his company provided business VoIP services. In other words, his company would set up a phone system for businesses around DFW with the intent of saving them money or otherwise providing a value over traditional phone systems.

In the summer of 2006, Matthew told Chris that he would like Chris to run a second instance of their software for Mike’s company. As part of handling that and all of Chris’ normal work for Matthew, Chris would be paid an additional salary by Mike. Chris was trying to pay off debt at the time, so this multiple-salary option seemed like a great opportunity.

While working for Mike, Chris saw quickly that his enw employer was not the sort of individual he wanted to do business with. At one point, Mike asked Chris to reverse engineer some software that Mike didn’t want to pay for. Chris informed Mike that it was outside of his skill set (which it was), and Chris instead focused on other tasks as assigned by Matthew (his direct supervisor at this company, too). After two or three months of this, Mike decided Chris wasn’t a good fit for his company. Chris considered the drastic reduction in income to be disappointing, but he was relieved to be removed from that organization.

Matthew’s then-girlfriend also worked for Mike during this time. She was exposed to his accounting and informed Chris that Mike’s business practices were simply unethical. Chris was relieved when Matthew said he would start distancing himself from this incredibly shady individual.

Chris’ Biggest Mistake

At some point during all this, Matthew asked Chris to do him a favor. Matthew asked Chris to provide a good, though false, credit reference when someone called about his new company, CoreIP. In what Chris calls a severe lapse in judgment, he agreed. Sometime later, Chris was indeed called by the individual, and he provided the false credit reference.

This was what Chris considers to be his biggest mistake. It was an unethical decision made out of pure loyalty. He believes he compromised his character and outright lied to help a friend out. This mistake would come back to haunt him years later.

Severing Ties

Eventually, Matthew told Chris that CommPartners decided that their Virtual ISP product (which was the bulk of Chris’ job) was not in line with their VoIP-focused business model. Supposedly, they were going to pull the plug on that portion of the business with only a 10-day notice to their customers. So, Matthew and Chris began taking steps toward keeping these users in service under a new business name.

Months later, Matthew informed Chris that CommPartners did not find as much value in the software package Chris had built has they had anticipated. As a result, Matthew anticipated CommPartners would be laying them off in the near future. Until then, Chris would continue to operate as he had been.

Sure enough, CommPartners fired Chris in early 2007. As far as he could tell, it was a roughly clean break. Matt indicated that he was still in dispute with them over CommPartners’ failure to pay a certain bill, but that was being handled by attorneys from both sides.

Chris’ Job Under CoreIP

After cutting ties with CommPartners, Matthew had Chris focus on managing and maintaining the VoIP software platform. The dialup portion of the business had pretty much become self-sustaining with what few customers were left. FCC changes had eliminated the “0110 routing” options that had provided toll-free service, so the only attention required from Chris on the dialup side of the business was the rare instance of an outage. With the propagation of broadband access, the dialup customer base was slowly diminishing anyway.

Under this new company, CoreIP, Matthew began establishing business arrangements with various third parties. His own underlying infrastructure on the back-end combined with Chris’ software platform on the front-end would provide a framework for wholesale customers as it always had, but now Matthew’s connections would generate the sales. Chris’ new job almost exclusively consisted of adding new features to the software on request, fixing bugs, trying to improve performance of the software, and frequently re-running its billing engine.

This billing engine would basically look at a call record and determine how much that particular customer should be charged for that particular call. So, if the customer’s billing rate was $0.05 per minute, and it’s a twenty-minute call, the system was what would say to charge this customer a dollar for that call. Matthew’s sales connections were frequently negotiating and changing rates for their customers, so one of Chris’ frequent tasks was to update the billing rates for the given customer and run that rating engine again. That one dollar call might now be a $0.80 call, since the customer’s rate went down a cent per minute.

Chris did not consider this work fulfilling, but it also didn’t require much of his time. Matthew permitted him to pursue his own business as long as it didn’t interfere with what Matthew needed from him, so Chris was pouring roughly 80% of his time into his own business (plus the after hours time he put in).

Matt periodically indicated to Chris that new double-salary opportunities were on the horizon, and Matthew even said that there was a chance that CoreIP would be sold and Chris would get a bonus as a result. None of these supposed opportunities emerged into reality, but Chris didn’t pursue the issue with Matthew because Chris still had the flexibility to support his now-growing business. Chris anticipated his own business would provide the long-term fulfillment and income he needed.

Mike Gets Raided

In March 2009, Chris noticed a couple of their really old servers were down. These two servers happened to be the ones that were physically located at a data center run by Mike Faulkner. After discussing it with Matt, Chris learned that Mike had been raided, and those servers were now in the care of the FBI. From what Chris gathered from the conversation, there was some sort of copyright issue or Mike had ripped off one too many people. Matthew assured Chris that they weren’t connected with anything shady that Mike was involved in, so he was safe.

He did say, to Chris’ chagrin, that they did still do a significant amount of business with Mike, though it was all legitimate wholesale VoIP service. As such, Matthew said it was entirely possible that Chris could be asked questions by FBI Agents about Mike and their business with him. Though Chris didn’t know the nature of it and wouldn’t be able to answer such questions, Matthew didn’t want Chris to be taken off-guard if it did happen.

The Investigation

What started weeks later and proceeded for the next several months was an investigation into Matthew, Mike, and just about everyone they ever did business with. That included Chris Sigler.

The Raid

In the first week of April 2009, the FBI raided Matthew’s data center (see on PC World, Slashdot, and Matt’s Google Sites post about it… or just Google “fbi matthew simpson”). Chris was actually the one to discover it. His daily work-from-home routine involved logging in to a set of servers that he worked on regularly, but none of those servers were responding when he got up that morning. He checked others and found everything to be down. Matthew was out of town at the time, so Chris expected to be needed physically at the data center to follow Matthew’s directions in order to get things back up (“plug this in here”, “type that in there”, etc.).

Chris packed up his things and made his way from his home in Roanoke to downtown Dallas. He called Matthew on the way to let him know they had an outage and to expect some calls. A few minutes later, Matthew called Chris back to say he learned the FBI was seizing all of their equipment. Matthew told Chris to go home because there was nothing he could do at that point. Instead, Chris continued on to the facility and talked with the FBI agents. He offered his contact information and got a fax number for the Special Agent who was in charge of the investigation. This Agent was the guy to talk to about getting Chris’ own company’s servers back.

After all, the FBI took all the servers and all the equipment, including those belonging to Chris’ company and some of Matthew’s unrelated customers (including Liquid Motors). Given that Agents can’t tell by looking at a server who it belongs to or what it was being used to do, it makes sense. However, this event did place Chris’ customers, including his church, in jeopardy. These third parties were obviously innocent bystanders in this, and Chris hoped to do right by them.

Not Wolverine

Some rumors at the time were circulating that the whole thing was because of the leaked “Wolverine” film was suspected to be on or have originated from Matt’s servers. However, this was not about copyright infringement.

It’s said that in every good lie, there’s a hint of truth. Chris later learned that Mike Faulkner hosted a number of copyrighted materials (including movies, TV shows, and more) on Mike’s servers. The list Chris saw had more than four hundred. More on that later, though.

Instead, this was about fraud. And lots of it. And not accidental, incidental, or otherwise inconspicuous fraud (if such a thing exists). This was blatant, even flagrant fraud amounting to tens of millions of dollars of damages. Mind you, Chris would learn about all that in the months to come, but the raid was completely and totally legitimate. In retrospect, Chris still regrets that his customers and other bystanders were harmed in this process, but he believes the FBI’s raid to have been justified. At the time, the “Wolverine” explanation seemed more likely in his mind than his friend being involved in some vast criminal enterprise.

Back Online

It quickly became apparent to Chris that there was not any chance he would be getting his company’s servers back anytime soon, but he was informed by the Special Agent in charge that he could provide hard drives to the FBI to get his customers’ data (websites, software, databases, etc.) back. When the FBI’s team had a chance, they would copy the data to the hard drives Chris would provide.

So, Chris emptied his bank account to stock up on hard drives from Fry’s, and it only took a few days for the FBI to complete the copying procedure.

When Chris dropped the drives off and when he picked them back up, he was subjected to a series of accusatory questions in the FBI’s parking lot. For example, he was asked if the investigators would find that he had received any large sums of money from Simpson through some underhanded arrangement. If they find that Chris had received fifty thousand dollars, their conversations would take on a very different tone. Chris’ response, in this case, was to offer full banking records and history, and Chris told the Agent that fifty thousand was what Chris made in a year working for Matthew. Chris perceived these peculiar questions as a good indication of how wrong the Agents were about his employer.

After receiving a copy of the data, Chris worked for several days with his customers to get their websites back up on third party hosting providers. Chris considered it painfully expensive at a point when his income had been completely severed, but he and his wife Sarah agreed that it was the right thing to do.

Questions, Questions, Questions

The following months saw Chris moving on with life, though he was regularly questioned over the phone by the FBI. He began to dread seeing an “UNKNOWN CALLER” on his phone because he knew he’d be answering questions about things he barely remembered that happened years ago from someone that seemed completely and totally convinced of his direct involvement in a criminal enterprise.

Occasionally, Agents would want to meet with Chris in person to ask a few questions, so Chris would drive to Dallas to offer what he could. At one point, he answered the “UNKNOWN CALLER” call, and the Special Agent asked Chris where he was to arrange a meeting, and Chris informed him that he was near Southlake. Unfortunately for Chris, Mike Faulkner supposedly lived in Southlake at the time, so the Agent responded, “Oh, so I guess you’re kicking back having a beer with Faulkner?” In fact, Chris was volunteering part time at his church at the time, and he had imprecisely referred to the location as Southlake for simplicity sake.

Despite the regular cooperation on Chris part (which started in about hour two of day one) and the steady berating from the Special Agent in charge… despite the fact that the Special Agent acknowledged that he had no smoking gun to substantiate his belief that Chris knew far more than Chris let on… despite the Special Agent’s acknowledgment that his awareness of corporate hierarchy and role delegation was limited compared his partner, who readily admitted that Chris’ ignorance was completely reasonable in the position Chris was in… despite the Agents’ decision to not take up Chris’ offer to take a polygraph test to substantiate his statements… despite all that, Chris continued to make himself available to the Agents. He even took a day of vacation one day to answer questions for a full day.

Over time, Chris was exposed to enough evidence by the Agents that the legitimacy of their case began to ring true in his mind. Early on, Chris had regularly told them that the “Simpson” they were describing did not line up with the “Matt” he knew. The issue, it turned out, was that Chris didn’t really know Matt like he thought.

The Agents showed Chris emails and other correspondence between Matthew and others that showed, plain as day, that shady stuff was going on. The problem Chris had was that they were in a context which he knew nothing of in most cases, and the few exceptions where he knew something were cases when he was fully informed by a sliver of information fed to him by Simpson himself.

Chris later reflected that he understood how it looks when a suspect says little more than “I don’t know,” and he expected they hear that a lot. However, every question was based on an assumption of additional, intentionally hidden knowledge. Chris considered the situation unfortunate, but he felt it was his duty to help in what little way he could. That included freely providing a substantial number of organized emails from his own backups.

This was all done before Chris was made aware of the fact that he was a suspect. Agents asked questions with a suspicious tone, but Chris was not a suspect. He freely answered questions and did what he could without the advice or presence of an attorney.

A Defendant

Chris remained oblivious to his suspected involvement until he received an “UNKNOWN CALLER” while getting ready for work. The Agent on the call informed him that a warrant had been issued for his arrest related to an indictment, and that he was to turn himself in at the FBI offices by 10:00 am. Chris was simply shocked.

The next couple years would play out with a very different light. Suddenly, this sidebar aspect of Chris’ life became front-and-center. He lived, breathed, and slept around this case. The initial charges included penalties that could place him behind bars for thirty years if convicted. Life decisions were now put on hold or questioned altogether, and it was at least as rough on Chris’ wife Sarah as it was on Chris himself.

Intense Waiting

More than two years passed from the time of Chris’ indictment to the time of his sentencing, which is an unusually long time for a federal case. The amount of evidence to sort through was so massive that the court had to appoint a special independent attorney whose sole purpose was to disseminate the deluge of data to the attorneys for the nineteen defendants.

Chris described these two years as a perpetual state of hurry-up-and-wait.

His cooperation did not end when he was charged since he considered himself no less duty bound to do the right thing. Not much changed except for the intensity of those same meetings and the presence of his court appointed attorney.

Chris would meet with the prosecution and the Agents on the case, trying to answer questions as much as he could. He offered to help locate logs on servers. He offered to help them find some call records they though sounded suspicious. Each time, the meeting would end with Chris saying, “Sure, I’ll help in any way I can.” Each time, Chris would follow up for weeks later, and each time the prosecution failed to take him up on his offers.

In one case, they provided hundreds of pages of an evidence manifest for Chris to sort through and identify the specific equipment he would need access to in order to find some specific things they had asked about. He tracked it all down and provided a detailed list of what he thought would be necessary. He never heard back.

So, it became a repeated process of Chris preparing to place life and work on hold to do something for them, them not responding, and Chris fretting about whether it was harming his chances in the outcome.

Trying to Plead

As time progressed, a number of discussions about plea bargains were mixed in with the informational conversations. Chris’ ultimate requirement was that he had to believe myself guilty of something in order to plea, as anything else would compromise his sense of integrity. He would not withhold a confession for anything that was legitimately presented to him as a crime.

This was quite the process as well. The prosecution tried a number of options for things to which Chris could plea, but Chris simply did not find any substance in their offers.

One highly-detailed proposal by the prosecution was centered around copyright infringement. The list of four hundred plus copyrighted materials referenced earlier came into play in this. The offer would have provided relatively painless punishment for Chris, but there was just one problem. Not only did Chris have nothing to do with it, but Mike and presumably other defendants could readily prove that he had no access to the relevant servers. Any perceived value provided by Chris’ witness would be lost as soon as the defense showed Chris’ willingness to lie to improve his prospects.

Chris even made an offer. Years ago, Chris pirated some software that he used regularly. Today, he is ashamed of it, but it did happen. Long before this whole situation arose, his conscience forced him to pay for its roughly $60 license, but that didn’t negate the illegality of his action. Unfortunately, the prosecution saw that to be too small to be worth their time. It was pointed out to Chris that this would be ample in a state case, but federal prosecutors will only get involved if the losses and/or criminal nature exceed a certain threshold. That $60 of theft just wasn’t bad enough.

Actually Pleading

After a series of delays in the trial date, a hard date was finally set for October 2011. With the trial date was rapidly approaching, the prosecution had not accepted any of Chris’ offers for help, and Chris expected they would be more focused on preparing their case than continuing this creative approach to plea agreements. Facing the risk of a 30-year sentence with no substantial way out, he began to feel pressure.

In one of a few final meetings with the prosecution, they out two of Chris’ mistakes mentioned earlier:

  • Chris signed a CLEC application indicating he held a title he did not; and
  • Chris provided a false credit reference for Matthew Simpson.

The prosecution also showed Chris several emails and instant messages between himself and Matthew Simpson that looked bad outside of context. For example, at one point dialup customers were going to be shut off when the company’s previous manner of providing service was eliminated. The company had been riding on the momentum of a previous business arrangement, that got cut off. An “uh oh” exchange took place in emails that included statements similar to “what are we going to do?” Implied at the time was the context of “for our customers” but that context was absent from the email. So, instead of…

Our prior arrangement isn’t going to carry us any longer. How do we keep our customers in service?

…it looked like…

We’ve been found out! How do we avoid spending the rest of our lives behind bars?

Since the email itself provided no context, a jury would be left to choose between the context provided by the guy who was living and working with an apparent criminal mastermind or the context provided by a prosecution who is just doing their job in the interest of justice. Even Chris admitted that he would be hard-pressed in that jury’s position. If that were the only instance, Chris may have considered the gamble worth it, but there were a handful of such exchanges. Taken collectively, Chris did not feel his prospects looked positive.

Then the prosecution made a statement that would seal the deal for Chris. They very clearly stated that Simpson’s use (and therefore Chris’ facilitation of that use) of 0110 Routing was fraud.

Even months later, Chris was not certain how it was fraud. His understanding is that 0110 works in a way that UNE CLECs (a certain kind of CLEC) are only charged what they would have already been charged. There was no additional costs to them, but the ILEC companies loved to charge a lot of money for this in retail situations though they could not contractually do so in wholesale situations. As a result, they frequently would send bills for such usage in hopes that people would pay them, effectively acknowledging a liability that existed outside their contract. Or so Chris had been taught.

If that information proved true (and those elements were not readily challenged by the prosecution, so Chris presumed they were), his best guess was that Matthew Simpson simply did not have the right to use 0110 for some legal or contractual reason. In that case, Chris could understand it being fraud.

Chris’ understanding of the concepts of fraud and conspiracy have been completely redefined as part of this process with the prosecutor’s explanations being confirmed by his attorney. His ignorance of the law and lack of understanding were repeatedly highlighted, so he accepted being unable to understand how their use of 0110 was fraudulent. His attorney confirmed it, though, so he believed he had no choice but to plea guilty.

The prosecution’s proposed agreement would recommend (not require, though that option was available to them) an arbitrary 30-month cap on Chris’ sentence, and the loss amount should be considered to be arbitrarily the total amount known to the authorities at the beginning of his cooperation (day one).

The problem Chris saw with that was that the amount was based on the massive conspiracy including the dozen plus other defendants, many of which were operating in areas to which he had had no exposure or opportunity to encounter. He believed his 0110 fraud to be a tiny little bubble attached to a massive enterprise, separated clearly by two or three orders of magnitude (tens or hundreds of thousands rather than tens of millions).

In light of this dispute, the prosecution agreed to put a note that he disagreed with the amount but otherwise accepted the agreement.

Nonfactual Resume

A plea agreement will always require that the would-be defendant sign off on an artifact called a Factual Resume. In a nutshell, this is typically the manner in which the one entering a plea provides a quantitative, factually accurate report of the issues relevant to their conduct. It’s basically a couple pages that explain what he or she knows about the case.

In Chris’ case, it was a 14-page document that said far more than he knew at the time of the offense and a fair amount more than he knew even after going through the investigation. In keeping with Chris’ need to ensure that anything he sign be something he know to be factually true, there was an extensive revision process. After several versions, the two sides arrived at a document that mentioned Chris a lot but typically in relation to the people, not the acts, it addressed.

Chris was still highly uncomfortable with the document. There was a lot of negative language on which he felt his requests had no traction. He noted that some followed this pattern:

X happened. Afterward, Sigler realized X happened because of shady reasons.

Of course, the language was far more specific, but the implication was that something shady happened and Chris awoke the next morning to realize what really took place. Nonetheless, this hypothetical Chris decided to continue on about his life unaffected by his now-willing participation in a shady enterprise. In reality, “after” was an accurate word, but the timing was when he was informed years later during one of the many various meeting with FBI agents. From a denotative standpoint, it was an accurate statement. The connotative implications were beyond the scope of reality, however.

In other cases, the denotation wasn’t even accurate. Chris was supposedly informed that 0110 Routing was legal because it had not been specifically prohibited. In fact, Chris did not believe the legality ever came into question much less discussion. He believed at the time that the method was not only legal but contractually supported. Even after signing it, he was not comfortable with those statements, but the prosecution would not accept his requested revisions in these areas. In these cases, Chris justified signing because it was at least close enough to the truth that he couldn’t fault it on technicalities given the time period he had to work within.

In one case, though, the prosecution would not budge on a specific statement about Chris’ understanding of Matthew Simpson’s tendencies toward business associates. The statement in the proposed Factual Resume made Chris appear to make a calculated observation that he had no exposure to support. He could not subjectively make the statement based on the information he had, so he required the prosecutor to make the statement in his presence as a summary of the evidence she had seen. Then, he believed he could at least say that he knew it to be true.

Overall, the Factual Resume is substantial in any plea agreement. In Chris case, he believed this is the area that most impacted the eventual result. He believes that if he would have had more time (after all, the prosecution was running out of time, too), the sides could have produced a more accurate and objective Factual Resume.

In September 2011, Chris entered a plea of guilty to a conspiracy to commit wire and mail fraud.

The Trial

Of the original nineteen defendants on the indictment, only four went to trial. Two were (and still were as of Chris’ sentencing) fugitives. Many others entered plea agreements like Chris did.

The trial lasted for eight weeks, a long time for a federal trial. A federal that lasts a week is considered by some to be a long trial. This trial only finished because the judge placed a time box on the proceedings.

Matthew Simpson was one of the four that went to trial. He was found guilty and was sentenced to 40 years. Afterward, Chris reflected that the young brilliant guy he thought he knew will be a life-long convict coming out for retirement only.

Of the three remaining defendants on trial, two were acquitted. They were both business partners with Matthew Simpson for years, and one of them was Simpson’s companies’ primary 0110 Routing customer. Chris knew both of the acquitted individuals (more from email and phone calls than in person), unlike many of the defendants, and he was happy to hear they would be going free. He had received what he considered callous treatment from both individuals throughout their dealings, but he did not believe them to be guilty of any real wrongdoing.

Sentencing Strategy

With the trial and the plea out of the way, it was now time for Chris and his attorney to begin coming up with a strategy for sentencing. They had a plea that had a recommended cap of a thirty month sentence, but even that number was substantially high for the dollar amounts Chris believed appropriate for his involvement.

The way federal sentencing works is based on a points system. There are a lot of reference materials for the sentencing guidelines, but here’s the nutshell version.

  • You start out with a base number of points that goes for your offense.
    • e.g. fraud gets X points; poking people with sharp sticks gets Y points.
  • You get certain additions based on the circumstances surrounding the offense.
    • e.g. a complex scheme adds X points; additional damages add Y points, correlating to the dollar amount (more dollars = more points).
  • You get certain subtractions based on the circumstances surrounding the offense.
    • e.g. a minor player loses X points; a cooperative witness loses Y points.

With a point total calculated, the judge references a chart with the points on the Y axis and the defendant’s criminal history on the X axis. Where those meet, the range is provided in months (like 30-36 months). The judge is not required to sentence within that range, but it should advise him on an appropriate baseline.

In Chris’ case, the points really racked up because of the dollar amount. The prosecution’s arbitrary assessment of damages was in the vicinity of $6.6 million dollars. Chris’ estimates based on “reasonably foreseeable” damages varied between $20,000 and $200,000, as his numbers were based on his relevant conduct surrounding 0110 Routing. The actual damages reported by AT&T in relation to 0110 Routing supported this range (approximately $78,000).

The whole strategy would be centered around communicating that there were multiple conspiracies at work in the case, and Chris was involved in a specific one. The specific conspiracy had reasonably foreseeable damages that would provide far less “bonus points” to increase the sentence, and Chris believed it was based far more on relevant conduct than the arbitrary “when he started cooperating” numbers provided by the prosecution.

These numbers would result in a total that would have been within the range to allow a sentence of home confinement (house arrest). The prosecution’s numbers would surely see Chris in prison.

The Sentence

Chris was sentenced to the prosecution’s recommended cap: 30 months. Chris was not successful in his attempt to adequately divide this massive miasma of conspiracies into its appropriate individual bubbles. The judge saw the one, solitary conspiracy, so Chris was sentenced according to the prosecution’s numbers.

The judge was working with the information provided to him, and his duty is to the law, not anyone’s own subjective idea of justice. Chris felt the judge ruled in a manner that is completely appropriate and acknowledged the proceedings included imperceptible graces that were not visible to the friends and family that were in attendance. The could have taken a third damages number that was provided by the probation office that reached up past $9 million. The judge could have declined to accept the mere recommendation of the prosecution and sentenced Chris to the 5 years that were permitted under the statute. The judge also could have simply set the sentence and moved on with his day.

Instead, he had enough mercy to accept the non-binding terms of the plea agreement. He also took the time, after revealing his decision, to explain his rational for the benefit of those in attendance. Chris believed the judge took the time to listen to the statements that were made, but the judge’s duty was ultimately to the law. Chris later commented that he respected and appreciated the judge and the way he handled the sentencing.

Incarceration

Chris will report to a thus far unnamed facility on Tuesday, July 24, 2012. If Chris proves eligible for good time (commonly called “good behavior”), he will be released from federal custody on September 9, 2014. If not, he will be released January 22, 2015. In either case, he hopes to be sent to a halfway house three to six months before his release. From there, he will be able to get a job, contribute to society, and potentially see his family again.

photo by: