United States v. Kestenbaum
908 F. Supp. 2d 364
E.D.N.Y2012Background
- Defendant Joshua Kestenbaum, on probation for conspiracy to commit bank and wire fraud, faced charges for false statements to government and failure to pay restitution.
- Probation conditions required $2,500 monthly restitution and full financial disclosure; a final forfeiture and restitution amount were set at sentencing in 2008.
- Hearing held July 9–11, 2012 addressed Charges 1 (false statements) and 3 (restitution) from the Violation Report; Charge 2 (tax evasion) was held in abeyance.
- Court found Kestenbaum exercised control over Bake Me a Wish (BMAW), with BMAW funds used to support personal expenses, including meals, housing, and legal fees.
- Kestenbaum drew salary via irregular cash withdrawals/ transfers, plus loans from BMAW, and used a $200,000 HELOC from his mother to finance personal needs.
- From April 2011 to February 2012, Kestenbaum allegedly failed to pay $18,500 of restitution, instead using funds to sustain a lifestyle, though he had resources available.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Restitution failure standard | Bearden standard applies; willful failure to pay supported by resources. | Resources were unavailable or constrained; could not pay despite efforts. | Probation violation for failure to pay restitution; willful and with resources available |
| Proven false statements under 18 U.S.C. § 1001 | Multiple false statements were knowingly, intentionally, and willfully made to government/Probation about finances. | Some omissions were inadvertent; relied on bookkeeper; not all statements were knowingly false. | Guilty of false statements; statements proven knowingly and willfully |
| Materiality of false statements | Statements had a natural tendency to influence restitution decisions and Probation Department review. | Some statements may have limited impact or were not representative of overall finances. | Statements were material; capable of influencing enforcement of restitution and probation actions |
| Charge 3 (restitution) reconsideration | Motion to dismiss or limit evidence on Charge 3 improper; sufficient basis existed for revocation. | Need for additional time/expert testimony; improper scheduling prejudiced defense. | Motion to reconsider granted; but Charge 3 denied dismissal on reconsideration |
Key Cases Cited
- Bearden v. Georgia, 461 U.S. 660 (U.S. 1983) (requires 'reasonable efforts to pay' restitution; automatic revocation not allowed if unable despite bona fide efforts)
- United States v. Colasuonno, 697 F.3d 164 (2d Cir. 2012) (probation revocation standard; preponderance of evidence standard assumed)
- United States v. Carlton, 442 F.3d 802 (2d Cir. 2006) (probation compliance and standard of proof for violations)
- United States v. Wiener, 96 F.3d 35 (2d Cir. 1996) (elements of false statements under 18 U.S.C. § 1001)
- United States v. Gaudin, 515 U.S. 506 (U.S. 1995) (materiality standard for false statements)
- United States v. Stewart, 433 F.3d 273 (2d Cir. 2006) (materiality of statements in coercive/government investigations)
- United States v. Brown, 744 F.2d 905 (2d Cir. 1984) (consideration of defendant's resources and obligations in restitution context)
- United States v. Corbett, 357 F.3d 194 (2d Cir. 2004) (restitution considerations and resources in probation context)
- Foxworth, 334 F. App’x 363 (2d Cir. 2009) (contextual materiality of false statements; not required to be isolated)