By Lynne Hendricks
Staff Writer
—
AMESBURY — A U.S. District Court judge ruled this week that Amesbury resident Paul Arguin, 47, has satisfied his restitution to the U.S. government and should not be liable for the full $3.2 million he was sentenced to pay after pleading guilty to charges of fraud while a consultant for the Air Force.
The former longtime School Committee member has turned over approximately $700,000 to $800,000 in restitution to date, according to the indictment. According to a judge considering Arguin's request to deem the debt satisfied, that amount is sufficient to compensate the government, given it received a $15 million settlement from Arguin's employer Dynamic Research Corporations in a related civil suit.
Arguin served a five-year jail sentence for improperly profiting from a U.S. Air Force contract by setting up corporations to sell and resell computer storage devices to the government and directing the business to corporations he and his boss had interests in, according to the indictment.
Arguin and his boss, Victor J. Garber, 63, formerly of North Andover were indicted in 2000, charged with 49 counts of conspiracy to defraud the U.S. government, wire fraud and aiding and abetting in violation of U.S. law, among other charges. It was asserted the two used their positions as technology consultants to the Air Force employed by defense contractor DRC to divert government procurement funds for personal use.
Because they diverted some of that business and profit to a company named Greenleaf Technology Inc., which was incorporated in the name of Arguin's wife, Lisa, she was also named as a defendant initially, but those charges were later dismissed. Arguin also transacted business through Amesbury-based Merrimac Systems Corp., run out of Arguin's Amesbury home.
The government asserted it lost $9.5 million from its dealings with Arguin and that Arguin had profited $3.2 million of that amount. Though Arguin maintained to the end that the government suffered no losses, he pleaded guilty and agreed to not seek any reduction of financial payments described in his restitution agreement.
Seven years after the fact, and after paying between $300,000 to $400,000 in restitution and turning over an additional $400,000 that was being held in escrow, he contended the government had received more than it lost and asked the court to release to him the $400,000 being held in escrow. Arguin was forced to turn over several business accounts, a 1997 Ford Expedition and a 28-foot sailboat owned by the couple.
"The United States' total recovery in these actions exceeds by approximately $10 million the losses it estimated as a result of the misconduct," Arguin argued.
There, the court denied Arguin, saying the government was entitled to damages beyond its losses.
"Under the circumstances, the court exercises its discretion and reduces the restitution obligation," wrote the judge. "In light of the language in the plea agreement, the court denies the request to release the monies in the escrow account because the government is allowed to allocate at least some of the settlement in the DRC litigation to the penalty component of the FCA settlement."
While the government contended it was entitled to treble damages in its suit against DRC, and the recovery against DRC was not for "the same loss" as was argued in the case against Arguin, the court found differently and cited a provision of the Mandatory Victims Restitution Act restricting double recovery by the victim.
"If the victim later recovers civil damages for the same loss, the court subtracts that sum from the victim's loss to determine the defendant's remaining restitution," the finding reads.
The court found that the government did not put forth a strong enough case that the U.S. Air Force had suffered loss in the amount of $30 million, which would have constituted the treble damages it was seeking, citing a press release put out by the Air Force announcing the settlement with DRC that admitted the $15 million recovered was more than the restitution figures from the criminal case.
"... In light of the huge settlement between the government and DRC, the wording of the press release, and the lack of clarity with respect to the government's alternative theory of damages, the court finds that Mr. Arguin has no future restitution obligations."
