ROCKPORT - Former attorney Jason Throne of Rockport, who pleaded guilty and was sentenced July 13 to 71 months in prison to one count of mail fraud, filed Notice of Appeal of his conviction and judgment five days later, on July 18, in U.S. District Court for the District of Colorado. Judge Christine M. Arguello presided.
In addition to the nearly six-years in U.S. Bureau of Prisons, at the facility near Oxford, Wisc., Throne was sentenced to a concurrent 37 months for one count of willfully making and subscribing false tax return(s), as well as supervised release of three years, also concurrent. Total restitution was set at $5,186,494.71.
In a plea agreement, dated April 5 and filed in U.S. District Court in Colorado, Throne agreed to plead guilty to the two charges as well as to pay $4,841,146.09 restitution to the court for Count 1 (mail fraud) and $345,348.72 restitution to the Internal Revenue Service for Count 2.
On Nov. 21, 2014, Throne and his wife, Mary Throne, entered into a settlement agreement with U.S. company Hunter Douglas Inc. stipulating that the Thrones pay back $5,068,589.70 to the company, according to documents filed in U.S. District Court in Denver, Colo. Both parties also agreed to pay their own attorney and court costs and fees, according to court documents.
As part of the settlement agreement, Mary Throne was dismissed as a defendant, but was required to adhere to a number of terms, in conjunction with separate terms stipulated for her husband, a former employee of Hunter Douglas.
The 2014 settlement agreement was signed by Senior Judge Richard P. Matsch, according to documents on file at the court.
As the criminal case wound its way through court, Jason Throne, through his attorney, John Henry Schlie of Greenwood Village, Color., also agreed in the plea agreement to file with the IRS complete, correct and appropriately signed amended income tax returns for the years 2009-2014, provide the IRS with tax-related information for those years that is in his possession, custody or control and pay any additional taxes, penalties and interest due and owing for those years.
According to the court document, the plea agreement stipulates that Throne "knowingly and voluntarily" waives the right to appeal any matter in connection with his prosecution, conviction or sentence unless it meets one of the following criteria:
"(1) the sentence exceeds the maximum penalty provided in the statute of conviction, (2) the sentence exceeds the advisory guideline range that applies to a total offense level of 23, or (3) the government appeals the sentence imposed... If any of these three criteria apply, the defendant may appeal on any ground that is properly available in an appeal that follows a guilty plea."
In the plea agreement, a sentence range of 46 month to 57 months (final offense level of 23) was "advised." In addition, the plea agreement said that, pursuant to guideline, "...if the court imposes a term of supervised release, that term would be at least one year but not more than three years for Count 1 and one year for Count 2."
The plea agreement also said, "The parties understand that, although the court will consider the parties' estimate, the court must make its own determination of the guideline range. In doing so, the court is not bound by the position of either party." The court document also said that either party can ask the court, "within the overall context of the guidelines," to depart from that range at sentencing if they believe there is reason to, or if there exists an aggravating or mitigating circumstance that was not adequately taken into consideration in one way or another.
"The parties understand that the court is free, upon consideration and proper application of all Section 3553 factors, to impose that reasonable sentence which it deems appropriate in the exercise of its discretion and that such sentence may be less than that called for by the advisory guidelines (in length or form), within the advisory guideline range, or above the advisory guideline range up to and including imprisonment for the statutory maximum term, regardless of any computation or position of any party on any Section 3553 factor," said the court document.
In court filings made a month before the July 13 sentencing, both the prosecutor, Asst. U.S. Attorney Thomas M. O'Rourke (Denver), and Throne filed objections to the Presentence Investigation Report, which followed the plea agreement, in which the Probation Office recommended that Throne's offense level for Court 1 be increased by two levels, to 25. While the Presentence Investigation Report is not a public document, other court documents indicate that by making the 2-level adjustment, the Probation Office recommended a sentence guideline range of 57 to 71 months.
On June 29, Throne filed a Motion for Downward Variance from the Advisory Guideline Range. In the motion, he acknowledged that he had been a party to a plea agreement with an "advisory sentencing guideline" range of 46 to 57 months in prison. The motion also noted the Presentence investigation Report's advisory guideline range of 47 to 71 months, and that both the government and Throne filed objections to the Probation Office's "adjustment for role in the offense" that causes the difference between the two guideline range calculations.
"Regardless of the ultimate determination by the court of the advisory guideline range, Mr. Throne moves for a downward variance pursuant to 18 U.S. Code § 3553(a) to a sentence of imprisonment of 40 months.”
In requesting the downward variance, Throne said that 40 months "is sufficient but not greater than necessary to accomplish" the need for the sentence imposed.
According to 18 U.S.C § 3553(a):
(2) the need for the sentence imposed -
(A) to reflect the seriousness of the offense, to promote respect for th elaw, and to provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training, medical care or other correctional treatment in the most effective manner.
In the court document, Throne also said, "However, as a practical manner," he was seeking a 40-month sentence because "it is likely to enable him to attend his son's graduation from college."
He also said in the court document that he has "expressed and demonstrated extreme remorse regarding his conduct, and has done so well before criminal charges were brought." He said he executed a settlement with Hunter Douglas on Nov. 13, 2014, admitting his conduct "in its totality," agreed to the judgment against him of $5,068,589.70 and agreed that all net proceeds from the sale of all real estate in which he had an interest would be distributed as directed by Hunter Douglas. He added that on March 13, 2015, he executed and subsequently filed an Affidavit in Support of Request to Resign while Under Investigation with the New Hampshire Supreme Court Professional Conduct Committee, and failed a similar affidavit with the U.S. Patent and Trademark Office.
He added that he has lost his career and nearly all of his financial and other possessions, has been abandoned by former friends, "suffered public embarrassment and derision," and has "suffered most from witnessing the effects that his conduct has had on his wife, his children, his father and extended family."
Throne also said that he "truly regrets his breach of faith and the loss of his relationship with Hunter Douglas," with whom he worked for more than 20 years and developed many close relationships with company management over the years and "was named as an inventor or co-inventor on 42 of Hunter Douglas' patents.
"The true depth of those relationships is apparent in the letter written by the Co-President of Hunter Douglas and attached to the Presentence Investigation Report, urging leniency in the sentencing of Mr. Throne," the court document said. "While Mr. Throne cannot turn back the clock and undo what has been done, he has sincerely apologized to Hunter Douglas for his deception and prays for their forgiveness."
Following Throne's Motion for Downward Variance, U.S. District Attorney John F. Walsh filed a response, objecting to Throne's request for a 40-month sentence saying "nothing in the defendant's situation is out of the ordinary."
The prosecutor said that while Throne took steps to show remorse before criminal charges were brought by settling the related civil case and giving up his licenses to practice law, he did so because "he had known since at least October 2014 that he was the target of a criminal investigation."
"He resolved the civil case the following month, and resigned from the bars of the Patent and Trademark Office and the State of New Hampshire in March 2015. In taking those steps, Throne merely bowed to the inevitable; he did nothing out of the ordinary," said the court document. "The Sentencing Guidelines take account of normal remorse and acceptance of responsibility, such as that which Throne has exhibited."
Walsh said that the "pain and suffering" caused to his family is "undoubtedly..real, but is also the natural consequence of Throne's criminal conduct being exposed."
Walsh also said that in reference to Throne's statement that he wants a reduced sentence to attend his son's graduation from college, "he is asking, in other words, to be treated differently than similarly situated defendant who don't have college-aged children. That, of course, would run counter to the requirement that the court at sentencing consider 'the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct.'"
Walsh said that during more than 14 years of crime, "this defendant put greed above family, going so far as to involved his innocent wife in his scheme. He now cannot use his family to avoid an appropriate sentence."
And finally, in reference to the letter Throne mentioned fom the the co-president of Hunter Douglas, the prosecutor said in the court document, "The company's co-president...did not concur in throne's request for a variant sentence; he instead suggested a sentence 'within the range of the negotiated plea deal.'"
Beginning in 1993, Jason Throne worked as an in-house patent attorney for Hunter Douglas Inc., a company that designs, manufactures and fabricates window coverings and related products.
In 2001, Throne was promoted to intellectual property general counsel, and remained in that position until his employment with the company was terminated in June 2014. Until 2015, Throne was licensed to practice law in New Hampshire and registered to practice in patent cases before the United Sates Patent and Trademark Office, according to court documents.
Among his duties, Throne was responsible for managing and overseeing patents and trademarks for Hunter Douglas and its affiliate; managing outside patent attorneys and outside investors; evaluating and licensing inventors' technologies; day-to-day management of patent and trademark litigation; advising senior management on patent and trademark issues; and advising in-house tax counsel on patent and trademark issues. He is also listed as an inventor in 42 of the company's U.S. patents, according to court documents.
In September 2007, Hunter Douglas provided Throne with a written policy statement that said full-time employees, such as him, could not have outside employment without approval. According to the plea agreement, the prosecution had evidence that Throne acknowledged that he understood that policy and signed a company form stating he did not have a second job.
Throne resided in Colorado from the time he joined Hunter Douglas until July 2004, when he moved to Rockport, Maine. While living in Colorado and working for the company, Throne was allowed to work primarily from his home, and occasionally at the company's office in Broomfield and at another company facility in Massachusetts.
According to the court document, on Dec. 29, 1999, Throne arranged for Patent Service Group Inc. to be incorporated in Colorado. He also opened a post office box in Boulder, Colo., stating on a Postal Service application that the box would be used by that company. In early 2000, the court document said that Throne opened an account in the the name of Patent Service Group, at a bank branch in Steamboat Springs, Colo.
In describing Throne's fraud scheme, the plea agreement document said that beginning in early 2000 and continuing to April 2014, Throne prepared 162 false Patent Service Group invoices, each addressed, "Jason T. Throne Hunter Douglas Inc.," and each showing the Boulder post office box as Patent Service Group's address.
On each invoice, Throne stated that Patent Service Group Inc. had performed patent searches for Hunter Douglas, and that Hunter Douglas owed money to the company for those services. According to the court document, "After writing 'OK to pay' and his initials on each of the invoices, Throne submitted them on a monthly basis to the accounting department of the HDWFI office in Colorado.'"
Relying on Throne's approvals, the Hunter Douglas affiliate accounting office paid the invoices by company checks and mailed them to the Boulder post office box. Between April 18, 2000, and April 25, 2014, the total amount of the checks was $4,841,146.09, according to the court document.
Throne picked up the checks at the post office box, according to the court document, deposited them into the Patent Service Group account at the Steamboat Springs bank and then moved the money from that account to personal bank accounts. The court document said that Throne then used the money for personal mortgage payments, home renovations, landscaping and other personal expenses.
Other than submitting the the invoices to the Hunter Douglas affiliate accounting department, nobody at either company knew about Patent Service Group Inc. or that it allegedly provided services to the company.
Searches of Throne's computers and files, according to the court document, produced no memoranda, reports, summaries, analyses or other materials documenting patent searches or any other services provided by Patent Service Group.
According to the court document, the first clue that there was unaccountable expenses came on Nov. 23, 2013, when the account department prepared a summary of the year's legal charges. Included in the report were the payments to Patent Service Group.
The report was emailed to two company employees, one of them a patent engineer whom Throne had supervised since 2010 and who had assisted him in investigating patents and evaluating the enforceability of the company's intellectual property.
According to the court document, that engineer sent an email to the accounting department and to Throne saying, "I have NO idea what all of the 'Patent Services Group' astronomical charges are." The engineer also wrote, asking Throne, "Jason, do you know what those are? I have never heard of that."
Throne contacted the engineer by telephone and said that Patent Service Group was a patent search service and the payments had been approved. "Later that day, Throne sent an email to [the engineer] and other HDWFI employees, misrepresenting that PSG 'is a patent search service that I use.'" In continuing to hide his relationship to Patent Service Group, according to the court document, Throne also said in the email that he "used PSG 'to conduct state of the art searches for different inventors and to conduct validity searches for are [sic] lawsuits, which for this year have been very high.'"
About six months later, on June 3, 2014, two Hunter Douglas supervisors and a lawyer for the company, having determined there was a connection between Throne and Patent Service Grouop, confronted him about it. According to the court document, Throne responded by "misrepresenting that his wife, as the owner of PSH, performed patent searches under his guidance.'"
According to the court document, the government's position is that the patent searches described in the Patent Service Grouop invoices were not conducted, and that Throne knew they were not conducted. Throne's position is that he conducted the searches, maintaining that he did the work "under the guise of PSG because it was his understanding that, as a Hunter Douglas employees, he was not allowed to conduct patent searches."
"The government notes, however, that Throne represented that he did patent searches as part of his duties as a Hunter Douglas lawyer," said the court document. And the prosecution pointed to an August 2002 report to his supervisor, in which he said he was "conducting a patent search" because "I believe the technology is old." He also recommended the company should conduct a patent search in a June 2008 memo, while discussing the proposed sale of a product by a Hunter Douglas subsidiary
The prosecution also pointed to a resume that Throne that prepared, after moving to Maine, which said one of his responsibilities at Hunter Douglas was to "Conduct Patent Searches of New Inventions."
"In addition, Throne claimed during an interview with government representatives that he used an hourly rate to compute the amounts billy by PSG but acknowledged he kept no record of the hours he supposedly spent conducting the searches," said the court document.
In the plea agreement document, it says that "The defendant agrees that, assuming he did the patent searches described in the PSG invoices, he nevertheless defrauded HDI and HDWFI out of $4,841,146.09 because arranging for such searches was his responsibility as a paid HDI employee."
As to the filing of false tax returns, the government said that "Throne should have reported all the proceeds of the above-described scheme on the returns as 'Other Income,' but he instead reported only some of the proceeds and mischaracterized them as other forms of income. He also falsely claimed business expenses."
Some of the mischaracterizations included reporting proceeds as wages paid to his wife for two years, and as capital gains on one return. Noting all of the miscalculations, due to misrepresenting fraud proceeds and including false expenses, among other things, the government said the tax loss resulting from Throne's false 2009-2014 tax returns is $345,348.72.
According to the terms of the original settlement with Hunter Douglas, to satisfy the judgment, the Thrones have agreed to sell properties they own, including:
1. A 35-acre parcel in Steamboat Springs, Colo. (assessed value for tax purposes: $810, purchased in 2000 for $180,000)
2. Home at 41 Pandion Lane in Rockport (current assessed value for tax purposes: $1,909,200)
3. 1.01 acres of land at Pandion Lane in Rockport (current assessed value for tax purposes: $114,200)
4. Vacant land on Barnestown Road in Camden (assessed value for tax purposes: $87,100)
According to a motion filed by Throne on June 26, the outstanding mortgage on the Rockport home exceeds the value of his home. He said that his name is on the home's title "in name only," and that the bank holds the mortgage, has changed the locks, pays the property tax and provides maintenance.
He also said in the court document that a boat jointly owned by the couple is "in the process of being sold" and after broker's fees, is expected to net less than $10,000.
According to the July 13 judgment, which Throne has filed Notice of Appeal, within 60 days of his release from confinement, Throne is required to meet with the probation officer to develop a plan for the payment of restitution.