Hakim J. Sutton indictment

Case Document 1 Filed 02/21/14 Page 1 of 13

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Holding a Criminal Term
Grand Jury Sworn in on November 9, 2012

UNITED STATES OF AMERICA

HAKIM J. SUTTON,

Defendant.

Crim. No.

Grand Jury Original

Charges:

13 U.S.C. 1343 (Wire Fraud)
26 U.S.C. 7201 (Tax Evasion)

26 U.S.C. 7203 (Willful Failure to
File a Tax Return)

1 D.C. Code 1102.06, 1107.01

1 D.C. Code 1163.09, 1163.35
(Knowingly Filing False or Misleading
Campaign Finance Report)

22 D.C. Code 3211 and 3212(a)
(Theft in the First Degree)

Criminal Forfeiture:
18 U.S.C. 28 U.S.C
246l(c), 21 U.S.C. 853(p)

INDICTMENT

The Grand Jury charges that:

At all times relevant to this Indictment:

Case Document 1 Filed 02/21/14 Page 2 of 13

COUNTS ONE THROUGH FIVE
(Wire Fraud)

Relevant Persons and Entities

1. Defendant HAKIM J. SUTTON was the principal owner of the
Sutton Group, located in Washington, D.C. Defendant SUTTON and the Sutton Group
performed political consulting services in the District of Columbia and elsewhere.

2. Candidate A was a member of the Council of the District of Columbia
Council"). Candidate A served as an at-large member of the D.C. Council from January 2009
through January 2, 2013. On November 6, 2012, Candidate A lost a bid for re-election as an at-
large member of the D.C. Council.

3. Beginning on or around May 16, 2011, Campaign A was formed as the campaign
committee to run the re-election campaign for Candidate A in a bid for re-election to an at-large
seat on the D.C. Council. Defendant SUTTON was the treasurer and custodian of records for
Campaign A.

4. PNC Bank was a financial institution that conducted business throughout the
United States, including the District of Columbia. The headquarters for PNC Bank were located
in Pittsburgh, On or about June 10, 2011, Defendant SUTTON opened a bank
account (ending in -6096) through PNC Bank on behalf of Campaign A (hereinafter the
"campaign bank account"). Both Defendant SUTTON and Candidate A were signatories on the
campaign bank account.

5. HSBC Bank was a financial institution that conducted business throughout the
United States, including the District of Columbia. The headquarters for HSBC Bank were

located in New York, New York, and McLean, Virginia.

Case Document 1 Filed 02/21/14 Page 3 of 13

6. The Internal Revenue Service (hereinafter referred to as the was an agency
of the United States Department of Treasury responsible for the ascertainment, computation,
assessment, and collection of federal taxes.

7. The District of Columbia Office of Campaign Finance was established
within the District of Columbia Board of Elections and Ethics to administer and enforce laws
pertaining to campaign finance operations, lobbying activities, conflict of interest matters, and
financial disclosures by public officials.

The Scheme to Defraud

8. From in or about May 2011 through in or about June 2012, in the District of
Columbia and elsewhere, Defendant SUTTON devised and intended to devise a scheme to
defraud Campaign A and others, and to obtain money owned by and under the custody and
control of Campaign A, by means of false and fraudulent pretenses, representations, and
promises.

Purpose of the Scheme to Defraud

9. It was the purpose of the scheme to defraud that Defendant SUTTON would use
his position as treasurer of Campaign A and his access to Campaign A's bank account to obtain
money by fraud for Defendant SUTTON's personal benefit and use.

Manner and Means

10. It was part of the scheme to defraud that, on or about May 16, 2011, Defendant
SUTTON filed with OCF a "Statement of Acceptance of Position of Treasurer," accepting the
position as Campaign A's treasurer. On or about May 16, 2011, Defendant SUTTON also filed
with OCF a "Statement of Organization" for Campaign A that named Defendant SUTTON as

Campaign A's treasurer and custodian of records.

Case Document 1 Filed 02/21/14 Page further part of the scheme to defraud that Defendant SUTTON solicited
and obtained campaign contributions from donors on behalf of Campaign A. As treasurer of
Campaign A, Defendant SUTTON deposited campaign contributionsto Campaign A into the
campaign bank account.

12. It was a further part of the scheme to defraud that Defendant SUTTON diverted
approximately $115,250 from the campaign bank account to himself by depositing funds
drawn from the campaign bank account into his own personal bank accounts, and converting
fimds drawn from the campaign bank account to cash. During the relevant period, while serving
as the treasurer of Campaign A and in his capacity as a signatory on the campaign bank account,
Defendant SUTTON wrote 36 checks payable to himself and drawn from the campaign bank
account. Those 36 checks totaled $115,250.00, which Defendant SUTTON converted for his

own personal use and benefit. The following chart summarizes the 36 checks that Defendant

SUTTON issued to himself:
APPROXIMATE DATE CHECK AMOUNT PAYEE

7/13/2011 5565 $5,000.00 Hakim J. Sutton
7/ 14/201 1 [Urmumbered] $5,000.00 Hakim J. Sutton
7/16/2011 5566 $5,000.00 Hakim J. Sutton
7/20/201 1 5568 $5,000.00 Hakim J. Sutton
7/22/2011 5569 $5,000.00 Hakim .1. Sutton

8/3/201 1 5572 $5,000.00 Hakim J. Sutton

8/9/201 1 5573 $5,000.00 Hakim J. Sutton
8/13/2011 5574 $3,000.00 Hakim J. Sutton
8/29/2011 5575 $5,000.00 Hakim J. Sutton
9/20/2011 5576 $3,000.00 Hakim J. Sutton
10/6/2011 5577 $2,000.00 Hakim J. Sutton
10/24/2011 5578 $800.00 Hakim J. Sutton
11/1/2011 5579 $1,500.00 Hakim J. Sutton
12/1/2011 5581 $5,000.00 Hakim J. Sutton
12/1/2011 5582 $5,000.00 Hakim .1. Sutton
12/5/201 1 5583 $5,000.00 Hakim J. Sutton

Case Document 1 Filed 02/21/14 Page 5 of 13

12/7/20] 1 5584 $5,000.00 Hakim J. Sutton
12/13/201 1 5585 $5,000.00 Hakim J. Sutton
12/21/2011 5586 $5,000.00 Hakim J. Sutton

1/4/2012 5587 $3,000.00 Hakim J. Sutton

2/1/2012 5588 $2,500.00 Hakim J. Sutton

2/5/2012 5589 $700.00 Hakim J. Sutton
2/15/2012 5590 $2,500.00 Hakim J. Sutton
2/15/2012 5591 $5,000.00 Hakim J. Sutton
2/27/2012 5593 $2,000.00 Hakim J. Sutton
2/27/2012 5594 $2,000.00 Hakim J. Sutton

3/7/2012 5598 $2,000.00 Hakim J. Sutton

3/9/2012 5599 $3,000.00 Hakim J. Sutton
3/12/2012 5600 $2,000.00 Hakim J. Sutton
3/17/2012 5602 $2,000.00 Hakim J. Sutton
3/19/2012 5603 $3,000.00 Hakim J. Sutton
3/31/2012 5604 $1,000.00 Hakim J. Sutton

4/1/2012 5609 $2,000.00 Hakim J. Sutton
4/20/2012 5612 $500.00 Hakim J. Sutton
4/24/2012 5615 $1,000.00 Hakim J. Sutton
5/10/2012 5616 $750.00 Hakim J. Sutton

13. It was a further part of the scheme to defraud that, on or about December 23,
2010, Defendant SUTTON opened a personal bank account with HSBC Bank by providing a
false social security number created by altering the third, fifth, and ninth digits of Defendant
SUTTON's actual social security number. Defendant SUTTON utilized this personal bank
account, along with another personal bank account he subsequently opened with HSBC Bank, to
negotiate checks that he paid to himself from the campaign bank account, by depositing the
checks, or currency obtained from cashing the checks, into his personal accounts.

14. It was a further part of the scheme to defraud that Defendant SUTTON filed and
caused to be filed campaign finance reports with OCF entitled, "Reports of Receipts and
Expenditures for Candidate/Principal Campaign Committee," also known as Form 16,"

which included Schedules A and B. The reports required Defendant SUTTON to report

Case Document 1 Filed 02/21/14 Page 6 of 13

accurately the itemized receipts and itemized operating expenditures for Campaign A during
certain reporting periods. The reports also required Defendant SUTTON to report accurately the
amount of funds available to Campaign A during the reporting periods. The reports filed by
Defendant SUTTON on behalf of Campaign A did not accurately report itemized expenditures
for Campaign A and the amount of funds available to Campaign A during the reporting periods:

a. On or about August 1, 2011, Defendant SUTTON electronically filed OCF
Form 16 with OCF for Campaign A for the reporting period February 1, 2011, through July 31,
2011. In the report, Defendant SUTTON omitted from Campaign A's itemized expenditures the
checks that Defendant SUTTON wrote to himself from the campaign bank account during the
reporting period, and falsely reported that Campaign A had $49,443.00 in available funds, when
in truth and in fact, as Defendant SUTTON well knew, Campaign A had approximately
$20,459.57 in available funds as of on or about August 1, 2011, as reflected in the account
statements for the campaign bank account.

b. On or about October 11, 2011, Defendant SUTTON electronically filed OCF
Form 16 with OCF for Campaign A for the reporting period August 11, 2011, through October
10, 2011. In the report, Defendant SUTTON omitted from Campaign A's itemized expenditures
the checks that Defendant SUTTON wrote to himself from the campaign bank account during
the reporting period, and falsely reported that Campaign A had $52,381.50 in available funds,
when in truth and in fact, as Defendant SUTTON well knew, Campaign A had approximately
$1,676.99 in available funds as of on or about October 2011, as reflected in the account
statements for the campaign bank account.

c. On or about December 12, 2011, Defendant SUTTON electronically filed

OCF Form 16 with OCF for Campaign A for the reporting period October 11, 2011, through

Case Document 1 Filed 02/21/14 Page 7 of 13

December 10, 2011. In the report, Defendant SUTTON omitted from Campaign A's itemized
expenditures the checks that Defendant SUTTON wrote to himself from the campaign bank
account during the reporting period, and falsely reported that Campaign A had $84,407.73 in
available funds, when in truth and in fact, as Defendant SUTTON well knew, Campaign A had
approximately $7,090.56 in available funds as of on or about December 12, 2011, as reflected in
the account statements for the campaign bank account.

d. On or about January 31, 2012, Defendant SUTTON electronically filed OCF
Form 16 with OCF for Campaign A for the reporting period August 1, 201 1, through January 31,
2012. In the report, Defendant SUTTON omitted from Campaign A's itemized expenditures the
checks that Defendant SUTTON wrote to himself from the campaign bank account during the
reporting period, and falsely reported that Campaign A had $88,750.90 in available funds, when
in truth and in fact, as Defendant SUTTON well knew, Campaign A had approximately
$2,765.63 in available funds as of on or about January 31, 2012, as reflected in the account
statements for the campaign bank account.

e. On or about March 12, 2012, Defendant SUTTON electronically filed OCF
Form 16 with OCF for Campaign A for the reporting period lfebruary 1, 2012, through March
10, 2012. In the report, Defendant SUTTON omitted from Campaign A's itemized expenditures
the checks that Defendant SUTTON wrote to himself from the campaign bank account during
the reporting period, and falsely reported that Campaign A had $111,177.25 in available funds,
when in truth and in fact, as Defendant SUTTON well knew, Campaign A had approximately
$3,953.33 in available funds as of on or about March 12, 2012, as reflected in the account

statements for the campaign bank account.

Case Document 1 Filed 02/21/14 Page 8 of 13

f. On or about June 11, 2012, Defendant SUTTON electronically filed OCF
Form 16 with OCF for Campaign A for the reporting period March 11, 2012, through June 10,
2012. In the report, Defendant SUTTON omitted from Campaign A's itemized expenditures the
checks that Defendant SUTTON wrote to himself from the campaign bank account during the
reporting period, and falsely reported that Campaign A had $115,515.25 in available funds, when
in truth and in fact, as Defendant SUTTON well knew, Campaign A had approximately
$2,928.65 in available funds as of June 11, 2012, as reflected in the account statements for the
campaign bank account.

15. It was a fiirther part of the scheme to defraud that Defendant SUTTON converted
funds from the campaign bank account for his own personal use and benefit at various retailers,
including Crate Barrel, Vida Fitness, Universal Gear, Gucci, Ferragamo, Armani Exchange,
the Apple Store, Amazon, Sprint, and Best Buy, and at various limousine and car services,
including VIP Limousine, Celebrity Limousine, Zipcar, and Ubercab.

16. It was further part of the scheme to defraud that Defendant SUTTON used funds
taken from the campaign bank account to pay for various trips, including hotel and air travel
expenses, as well as to purchase goods and services in the locations where he traveled. These
trips included travel to Martha's Vineyard, Massachusetts, and Fire Island, New York, in August
2011; Rehoboth Beach, Delaware, in September 2011; Las Vegas, Nevada, in December 2011;
San Diego, Califomia, and New York, New York, in February 2012; Miami Beach, Florida, in
March 2012; and Greece in April 2012.

17. On or about the dates listed for each count below, in the District of Columbia and
elsewhere, for the purpose of executing the aforementioned scheme and artifice and attempting

to do so, the defendant, HAKIM J. SUTTON, did knowingly cause to be transmitted by means of

Case Document 1 Filed 02/21/14 Page 9 of 13

wire communications in interstate and foreign commerce, certain writings, signs, signals, and

sounds specified below:

Count Approximate Date Wire Communication

1. 7/14/2011 Interstate wire communication incident to
Defendant SUTTON causing a $5,000
check drawn on the campaign bank
account to be deposited at a bank located
in the District of Columbia.

2. 8/30/2011 Interstate wire communication incident to
Defendant SUTTON causing a $5,000
checkdrawn on the campaign bank
account to be deposited at a bank located
in the District of Columbia.

3. 12/01/201 1 Interstate wire communication incident to
Defendant SUTTON causing a $5,000
check drawn on the campaign bank
account to be deposited at a bank located
in the District of Columbia.

4. 12/27/2011 Interstate wire communication incident to
Defendant SUTTON causing a $5,000
check drawn on the campaign bank
account to be deposited at a bank located
in the District of Columbia.

5. 2/15/2012 Interstate wire communication incident to
Defendant SUTTON causing a $5,000
check drawn on the campaign bank
account to be deposited at a bank located
in the District of Columbia.

(Wire Fraud, in violation of Title 18, United States Code, Section 1343)

COUNT SIX
(Tax Evasion)

18. Paragraphs 1 through 16 of this Indictment are realleged and incorporated by
reference as if set out in full.

19. During the calendar year 2011, the defendant, HAKIM J. SUTTON, a resident of
the District of Columbia, had and received taxable income. Upon that taxable income, there was

owing to the United States of America a substantial tax due. Well knowing the foregoing facts,

Case Document 1 Filed 02/21/14 Page 10 of 13

and failing to make an income tax retum on or before April 17, 2012, as required by law, to any
proper officer of the Intemal Revenue Service, and pay to the Intemal Revenue Service the
income tax, Defendant SUTTON, from at least on or about January 1, 2010, the exact date being
unknown to the Grand Jury, through on or about May 14, 2012, in the District of Columbia and
elsewhere, did willfully attempt to evade and defeat the income tax due and owing by him to the
United States of America for the calendar year 2011 by committing affirmative acts of evasion,
including but not limited to opening multiple bank accounts with a false social security number,
filing false campaign finance reports with the District of Columbia Office of Campaign Finance,
and converting misappropriated funds to cash.

(Income Tax Evasion, in Violation of Title 26, United States Code, Section 7201)

COUNT SEVEN
(Willful Failure to File a Tax Return)

20. Paragraphs 1 through 16 of this Indictment are realleged and incorporated by
reference as if set out in full.

21. During the calendar year 2011, the defendant, HAKIM J. SUTTON, who was a
resident of the District of Columbia, had and received gross income of at least $9,500. By reason
of such gross income, Defendant SUTTON was required by law, following the close of the
calendar year 2011 and on or before April 17, 2012, or at such other time as allowed by the
Intemal Revenue Service as a result of an extension, to make an income tax return to any proper
officer of the Intemal Revenue Service, stating specifically the items of his gross income and any
deductions and credits to which he was entitled. Well knowing and believing all of the
foregoing, Defendant SUTTON did willfully fail, on or about April 17, 2012, in the District of
Columbia and elsewhere, to make an income tax return, in violation of Title 26, United States

Code, Section 7203.

Case Document 1 Filed 02/21/14 Page 11 of 13

(Willful Failure to File a Tax Return, in Violation of Title 26, United States Code,
Section 7203)

COUNTS EIGHT THROUGH TWELVE
(Knowingly Filing False and Misleading Campaign Finance Report)

22. Paragraphs 1 through 16 of this Indictment are realleged and incorporated by
reference as if set out in full.

23. On or about the dates listed for each count below, in the District of Columbia, the
defendant, HAKIM J. SUTTON, did knowingly and willfully file a false and misleading report,
voucher, and other paper, and make a false and misleading statement to the District of Columbia
Elections Board, through a campaign finance report entitled, "Reports of Receipts and
Expenditures for Candidate/Principal Campaign Committee," also known as Fonn 16,"

which the defendant, HAKIM J. SUTTON, electronically filed with the District of Columbia

Office of Campaign Finance.

Count Approximate Date
8. 8/1/2011

9. 10/11/2011

10. 12/12/2011

11. 1/31/2012

12. 3/12/2012

(Knowingly Filing False and Misleading Campaign Finance Report, in violation of
Title 1, District of Columbia Code, Sections 1102.06 and 1107.01 (subsequently
amended in Title 1, District of Columbia Code, Sections 1163.09 and 1163.35))

COUNT THIRTEEN
(Knowingly Filing False and Misleading Campaign Finance Report)

24. Paragraphs 1 through 16 of this Indictment are realleged and incorporated by

reference as if set out in full.

ll

Case Document 1 Filed 02/21/14 Page 12 of 13

25. On or about June 2012, in the District of Columbia, the defendant, HAKIM J.
SUTTON, did knowingly and willfully file a false and misleading report, voucher, and other
paper, and make a false and misleading statement to the District of Columbia Elections Board,
through a campaign finance report entitled, "Reports of Receipts and Expenditures for
Candidate/Principal Campaign Committee," also known as Form 16," which the
defendant, HAKIM J. SUTTON, electronically filed with the District of Columbia Office of
Campaign Finance.

(Knowingly Filing False and Misleading Campaign Finance Report, in violation of
Title 1, District of Columbia Code, Sections 1163.09 and 1163.35 (formerly Title 1,
District of Columbia Code, Sections 1102.06 and ll07.01))

COUNT FOURTEEN
(First Degree Theft)

26. Paragraphs 1 through 16 of this Indictment are realleged and incorporated by
reference as if set out in full.

27. Between on or about July 13, 2011, and on or about May 14, 2012, in the District
of Columbia and elsewhere, the defendant, HAKIM J. SUTTON, wrongfully obtained property
of another, to wit, Campaign A, in a value exceeding $1,000, with the intent to deprive
Campaign A of a right to the property and a benefit of the property and to appropriate the
property to his own use.

(Theft in the First Degree, in violation of Title 22, District of Columbia Code,
Sections 3211 and 3212(a))

FORFEITURE ALLEGATION
1. Upon conviction of any of the offenses alleged in Counts One through Six, the
defendant shall forfeit to the United States any property, real or personal, which constitutes or is
derived from proceeds traceable to the offense, pursuant to 18 U.S.C. 981(a)(1)(C) and 28

12

Case Document 1 Filed 02/21/14 Page 13 of 13

U.S.C. 2461 The United States will seek a forfeittire money judgment against the
defendant in the amount o1"$1 15,250.
2. If any of the property described above as being subject to forfeiture, as a result of
any act or omission ofthe defendant:
21. cannot be located upon the exercise ol'due diligence;

b. has been transferred or sold to, or deposited with, a third party;

c. has been placed beyond thcjurisdiction of the Court;

d. has been substantially diminished in value; or

c. has been commingled with other property that cannot be divided without
difficulty;

the defendant shall 'l'o1'i"eit to the United States any other property 01' the defendant, up to the
value ofthe property described above. pursuant to 21 U.S.C. 8S3(p).

(Criminal Forfeiture, pursuant to Title 18, United States Code, Section Title
28, United States Code, Section 2461(e), and Title 21, United States Code, Section 853(p))

A TRUE BILL:

FOREPERSON

fly

i=oI~i UNITED . ES IN
AND FOR THE DISTRICT or COLUMBIA