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UNITED STATES v. BEN M. HOGAN CO.

January 14, 1988

UNITED STATES OF AMERICA, PLAINTIFF
v.
BEN M. HOGAN COMPANY, INC., DEFENDANT



The opinion of the court was delivered by: ROY

 ELSIJANE T. ROY, UNITED STATES DISTRICT JUDGE

 Before the Court is the defendant's Motion for Reduction of Sentence. On December 10, 1987 the Court held a hearing on the matter, and allowed the parties to file supplemental briefs.

 On May 9, 1984 the defendant, Ben M. Hogan Company, Inc., was found guilty by a jury of one count of conspiracy to violate the Sherman Act and three counts of mail fraud. A motion for a new trial or judgment of acquittal was denied by this Court on May 31, 1984. On June 1, 1984 the defendant was sentenced as follows: $ 800,000 on the conspiracy count, and $ 1,000 on each of the mail fraud counts for a total fine of $ 803,000. The Court directed the defendant to pay the fine in three equal installments with the first payment due on September 1, 1984, the second payment due on September 1, 1985 and the final payment due on September 1, 1986. The imposition of the fines was based upon the entire record, which included the report of the U.S. Probation Office. The Court accepted the defendant's figures as indicated in the probation report. The figures were submitted to the probation office by defendant's attorney and vice-president and controller of Ben M. Hogan Company, Inc. Said figures reflected that for five previous years the net worth of Ben M. Hogan Company, Inc. had not been less than $ 5,076,971 and that in 1980 the net worth was $ 6,185,126. This company is the holding company, and there are three wholly-owned subsidiaries: Hogan Construction Company, Inc., St. Francis Material Company, and Lewis Foundation Drilling Co., Inc. Ben M. Hogan, Jr. owns the largest amount of stock in Ben M. Hogan Company, Inc., and his daughter, two sons, and wife are employed by the corporation.

 On October 1, 1984 Ben M. Hogan, Jr., Chairman and President of Ben M. Hogan Company, Inc., signed and filed with the Court a surety bond, acknowledging that he was indebted to the Government in the penal sum of $ 267,667. He further stated:

 
If Ben M. Hogan Company, Inc. shall pay the first installment of the fine imposed by this Court June 1, 1984, or if said fine shall be vacated or abated by order entered herein by this Court, the United States Court of Appeals for the Eighth Circuit, or the Supreme Court of the United States, then this obligation shall be null and void. The express purpose of this undertaking is to guarantee that Ben M. Hogan Company, Inc. shall pay the first installment of the fine in the sum of $ 267,667, or so much thereof as shall finally be imposed upon it, when it is due and payable pursuant to the order of this Court. If Ben M. Hogan Company, Inc. does not make payment at that time the undersigned shall do so on behalf of Ben M. Hogan Company, Inc.

 On July 25, 1985 the Eighth Circuit Court of Appeals reversed the conviction of Ben M. Hogan Company, Inc. on one count of conspiracy to restrain trade in violation of the Sherman Act, and affirmed its conviction on the three associated mail fraud counts. United States v. Ben M. Hogan Company, Inc., 769 F.2d 1293 (8th Cir. 1985). Subsequently, on petition for writ of certiorari by the Government, the Supreme Court granted the Government's petition, vacated the judgment, and remanded "for further consideration in light of Rose v. Clark, 478 U.S. [570], 106 S. Ct. 3101, 92 L. Ed. 2d 460 (1986)." United States v. Ben M. Hogan Company, Inc., 478 U.S. 1016, 106 S. Ct. 3325, 92 L. Ed. 2d 732 (1986). On remand, on January 12, 1987 the Eighth Circuit Court of Appeals affirmed the conviction against Hogan on Count One for violation of the Sherman Act and the fine imposed of $ 800,000, and reaffirmed the mail fraud convictions. United States v. Ben M. Hogan Company, Inc., 809 F.2d 480 (8th Cir. 1987). On March 30, 1987 defendant's petition for rehearing en banc and by the panel was denied. The Supreme Court subsequently denied defendant's petition for a writ of certiorari. Ben M. Hogan Company, Inc. v. United States, 484 U.S. 822, 108 S. Ct. 84, 98 L. Ed. 2d 46 (1987).

 A motion to reduce a sentence under Rule 35 of the Federal Rules of Criminal Procedure is entrusted to the district court's discretion. United States v. Losing, 584 F.2d 289 (8th Cir. 1978), cert. denied, 439 U.S. 1081, 59 L. Ed. 2d 51, 99 S. Ct. 865 (1979). A Rule 35 motion is intended to give every convicted defendant a second round before the sentencing judge. United States v. Colvin, 644 F.2d 703, 705 (8th Cir. 1981). "It also gives the judge an opportunity to reconsider the sentence in the light of any further information about the defendant or the case which may have been presented to him in the interim." Id.

 The defendant has presented three reasons as to why the sentence should be reduced: (1) Substantially changed financial circumstances; (2) To achieve consistency with other sentences imposed for similar offenses; and (3) To maintain the Ben M. Hogan Company, Inc. as a viable competitor in the construction industry. The Court heard the testimony of four witnesses presented on behalf of the defendant, and has considered it, as well as exhibits which have been attached to the pleadings. At the time of the original sentencing, the defendant was the largest highway contractor in Arkansas. At that time, the Court was aware that defendant might be debarred by the State of Arkansas and it might have to settle any civil case which the State might bring. This was taken into consideration by the Court as is set out in the Court's order addressing the motion for stay. In fact, most, if not all, of the information that is now presented to the Court was considered by the Court at the original sentencing, and other courts have denied a Rule 35 motion based upon the fact that no new information or material facts or unanticipated matter had been presented. United States v. Hamilton, 391 F. Supp. 1090 (W.D. Mo. 1975); United States v. Stromberg, 179 F. Supp. 278 (S.D.N.Y. 1959). Nevertheless, even considering the recently submitted information anew, the Court is not persuaded that a substantial reduction is warranted or justified.

 The defendant has submitted lists of cases from 1984 and 1985 which purport to demonstrate that other courts imposed lower fines than that which was imposed upon the defendant. Prior to the imposition of sentence, the Court considered a carefully prepared and extensive probation report, which was compiled after obtaining figures from defendant's own counsel. The Antitrust Division recommended a fine of $ 1,000,000. The co-defendant, A.P.T. Construction Company, who pled guilty prior to Hogan's trial, was fined $ 150,000, approximately 15 percent of its net worth. The Probation Office advised the Court it used the same formula in the Hogan case in recommending an $ 800,000 fine. The Court is not convinced the factual situations and figures involved in the cases cited by the defendant are apposite to this case.

 One of the bonding agents for the defendant testified that many of the difficulties defendant has encountered in obtaining bonding are attributable to a $ 1.6 million note which appears to be payable on December 1, 1988, and the $ 800,000.00 fine imposed by this Court. The bonding agent did acknowledge that if the $ 1.6 million note was extended and the Court's fine was payable over a three or four-year period, the company's ability to get bonding would be significantly enhanced.

 In July 1987, the defendant was the low bidder on two State of Arkansas highway jobs; one bid was for $ 3.6 million and the second was for $ 1.4 million. The company bid on a total of 9 jobs in July 1987. The company also bid on State highway projects in August and September, winning one small job in August and a second job at the September letting. St. Francis Material Company bid and performed over $ 9 million worth of work in 1985 and 1986.

 The testimony reflected that Mr. Hogan's salary is $ 280,000 per year, and that he enjoys a $ 410,000.00 interest-free loan from the company. Mr. Hogan is required to pay only $ 10,000 per year on the note. As a result of those terms, Mr. Hogan is enjoying an annual benefit of $ 40,000 to $ 50,000 because he doesn't have to pay interest on the loan. Furthermore, at the time of the sale of St. Francis Material Company in July 1987, $ 310,914.00 in accounts payable to ...


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