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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TENNESSEE NORTHERN DIVISION, AT KNOXVILLE, TENNESSEE

United States of America, Government, Vs. Freddie Marshall Carson, Defendant,

: : : : : CR : 3-12-17 : : :

Transcript of change of plea before the Honorable Thomas A. Varlan on August 1, 2012.

APPEARANCES: ON BEHALF OF THE GOVERNMENT: Jennifer Kolman Assistant U.S. Attorney

ON BEHALF OF THE DEFENDANT: Bobby Hutson, Jr. Assistant Federal Defender

Jolene Owen, R.P.R. 800 Market Street, Suite 131 P.O. Box 2201 Knoxville, Tennessee, 37901 (865) 384-6585

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 morning. THE COURT: Thank you. COURTROOM DEPUTY: Criminal action 3:12cr17-1,

United States of America versus Freddie Marshall Carson. Jennifer Kolman is here on behalf of the government. proceed? MS. KOLMAN: Present and ready, Your Honor. Bobby Hutson is here on Is the government present and ready to

COURTROOM DEPUTY: behalf of the defendant. ready to proceed? MR. HUTSON: THE COURT:

Is the defendant present and

Present and ready, Your Honor. Thank you. We will begin by asking

the United States Attorney to please give us the status of this case. MS. KOLMAN: This will be a change of plea this

Mr. Carson, the Court has been informed you wish to change your plea to a plea of guilty. If you

will please come up to the lectern along with your counsel, we'll begin by having you sworn in by the courtroom deputy. FREDDIE M. CARSON was first duly sworn and testified as follows: COURTROOM DEPUTY: the record. 2 Please spell your name for

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 writing? MR. CARSON: THE COURT: No, sir. Have you ever been treated for any MR. CARSON: Freddie Marshall Carson,

F-r-e-d-d-i-e M-a-r-s-h-a-l-l C-a-r-s-o-n. THE COURT: Thank you, Mr. Carson. Before I

accept your guilty plea, there are a number of questions I need to ask you to assure that your plea is valid. Do you understand that you are now under oath and that if you answer any of my questions falsely, your answers may later be used against you in another prosecution for perjury or making a false statement? MR. CARSON: THE COURT: I do. You have given us your name. Do

you go by any other names? MR. CARSON: THE COURT: MR. CARSON: THE COURT: schooling? MR. CARSON: THE COURT: College. Any difficulties reading or No, sir. How old are you, please? 45. How far did you go in any

mental illness or addiction to narcotic drugs of any kind? MR. CARSON: No, sir. 3

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Have you taken any drugs, medicine,

pills, or alcoholic beverage of any kind within the last 24 hours? MR. CARSON: THE COURT: here today? MR. CARSON: THE COURT: Yes, sir. Mr. Hutson, do you consider the No, sir. Do you understand what is happening

defendant competent to enter a plea of guilty to the charged offense? MR. HUTSON: THE COURT: I do. Mr. Carson, have you received a

copy of the Indictment in this case? MR. CARSON: THE COURT: Yes, I have. Have you had ample opportunity to

discuss the charges against you and your case with your lawyer? MR. CARSON: THE COURT: Yes. Have you told your lawyer

everything you know about this case? MR. CARSON: THE COURT: Yes, sir. Do you believe that your lawyer is

fully aware of all of the facts on which the charges are based? MR. CARSON: Yes. 4

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Has your lawyer advised you as to

the nature and meaning of the charges? MR. CARSON: THE COURT: Yes. Has your lawyer specifically

advised you as to the elements of the offenses charged which the government must prove beyond a reasonable doubt? MR. CARSON: THE COURT: Yes. Has your lawyer advised you as to

any defense you may have to the charges? MR. CARSON: THE COURT: Yes. Have you and your lawyer discussed

the terms of your plea agreement? MR. CARSON: THE COURT: Yes. Have you and your lawyer discussed

any maximum possible penalty, including any imprisonment, fine and term of supervised release, as well as any mandatory minimum penalty? MR. CARSON: THE COURT: Yes, sir. Are you satisfied with the advice

your lawyer, Mr. Hutson, has given you in this matter? MR. CARSON: THE COURT: Yes, sir. Mr. Hutson, are you satisfied that

the defendant understands the charges against him? MR. HUTSON: I am. 5

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: As well as the elements of the

offenses charged and the legal meaning of the words used in the Indictment and in the Plea Agreement? MR. HUTSON: THE COURT: Yes, Your Honor. Mr. Carson, next I need to talk to

you about certain constitutional rights that you waive or give up, if you plead guilty. Do you understand that you have a right to plead not guilty to any offense charged against you and to persist in that plea? MR. CARSON: THE COURT: Yes, sir. Do you understand that you would

then have the right to a trial by jury during which you would also have the right to the assistance of counsel for your defense? MR. CARSON: THE COURT: Yes. Do you understand you would have

the right to see and hear all the witnesses and have them cross-examined in your defense as well as the right on your own part not to testify, unless you chose to do so in your own defense? MR. CARSON: THE COURT: Yes, sir. And do you understand you would

have the right to compel the attendance of witnesses to testify on your behalf? 6

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. CARSON: THE COURT: Yes, sir. Do you understand that by entering

a plea of guilty, if accepted by the Court, there will be no trial, and that you will have given up the right to a trial of any kind, as well as those other rights associated with a trial that I have described to you? MR. CARSON: THE COURT: Yes, sir. Do you understand that you will

also be giving up the right not to be compelled to incriminate yourself, that is, the right to remain silent, and the right to require the United States to prove you guilty beyond a reasonable doubt? MR. CARSON: THE COURT: Yes, sir. With respect to the voluntariness

of your plea, has any person, including an officer or agent of the government, put any pressure on you, mental or physical, to force you to plead guilty? MR. CARSON: THE COURT: No, sir. Has any person, including an

officer or agent of the government, promised or suggested that you will receive a lighter sentence or any other form of leniency, if you plead guilty other than as a result of your acceptance of responsibility pursuant to the sentencing guidelines? MR. CARSON: No, sir. 7

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Mr. Carson, you have entered into a

plea agreement containing a provision of the type specified in Federal Rules of Criminal Procedure 11(c)(1)(A). That being you have pled guilty to certain

charges and the government has agreed it will not bring or will move to dismiss other charges against you. you understand that? MR. CARSON: THE COURT: Yes, sir. The Court advises you that if it Do

accepts the plea agreement, the agreed disposition that is, that the government will not bring or will move to dismiss other charges against you will be included in the judgment. Your plea agreement also contains a provision of the type specified in Federal Rules of Criminal Procedure 11(c)(1)(C). This means you and the

government have agreed on a specific sentence or sentence component to be the appropriate disposition of this case. Specifically, you and the government have

agreed pursuant to Title 18 United States Code 3653(a)(3) that the order of restitution in this case will be in the amount of $1,145,254.32. correct? MR. CARSON: THE COURT: Yes, sir. Do you understand this recommended 8 Is this

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 component of sentence, specifically this restitution amount, is not binding on the Court until the Court accepts the plea agreement? MR. CARSON: THE COURT: Yes. Do you understand if the Court

accepts the plea agreement, you will be sentenced in accordance with your agreement with the government? MR. CARSON: THE COURT: Yes, sir. However, if the Court were to

reject the plea agreement, you would then have the right to withdraw your plea and proceed to trial at a date and time to be determined by the Court. that? MR. CARSON: THE COURT: Yes, sir. Pursuant to Federal Rules of Do you understand

Criminal Procedure 11(c)(3)(A), the Court will defer a decision on whether to accept the plea agreement until it has had the opportunity to review the Presentence Report in this case. Do you also understand that under the terms of your plea agreement, you are waiving your right to appeal and to directly or collaterally attack your conviction and/or sentence in this case, including the right to file any motions or pleadings pursuant to 28 United States Code 2255? 9

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. CARSON: THE COURT: Yes, sir. Do you further understand the only

exceptions to this waiver on your part are that you retain the right to appeal a sentence imposed above the sentencing guideline range, as determined by the court, for ineffective assistance of counsel or prosecutorial misconduct? MR. CARSON: THE COURT: Yes. Thank you. Mr. Hutson, do you wish

to waive reading of the Indictment? MR. HUTSON: THE COURT: So waived. Ms. Kolman, if the government will

please state its case against the defendant, including the specific charges, the elements and factual basis for the elements of the charges and the maximum possible punishment. MS. KOLMAN: Yes, Your Honor. The defendant is The

pleading to two counts of the 11 count indictment.

first count being wire fraud in violation of 18 United States Code 1343. The punishment for this offense is up to 20 years imprisonment, three years of supervised release, a $250,000 fine and a $100 mandatory assessment fee. Count 7 is a money laundering charge in violation of 18 United States Code 1957. 10

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 defraud. Third, in advancing, furthering or carrying out the scheme, defendant transmitted any writing, signal or sound by means of wire, radio or television communication in interstate commerce or caused the transmission of any writing, signal or sound of some kind by means of wire, radio or television communication in the interstate commerce. Money laundering elements are as follows: One, the defendant obtained money that is proceeds of a suspicious unlawful activity. Two, the known property is criminally derived. Three, the defendant knowingly engaged in or 11 Case 3:12-cr-00017 Document 35 Filed 05/01/13 Page 11 of 21 PageID #: 130 The punishment for this offense carries up to ten years imprisonment, three years supervised release, a $250,000 fine or twice the amount of involved in the crime along with a $100 mandatory assessment fee. The elements that are needed to be proved as to a wire fraud charge are as follows: One, that the defendant devised a scheme to defraud or obtain money or property by materially false or fraudulent pretenses, representations or promises or willfully participated in such a scheme with knowledge of its fraudulent nature. Second, that the defendant acted with intent to

August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 attempted to engage in a monetary transaction with the proceeds of the SUA involving a financial institution. And fourth, that the amount of transaction was greater than $10,000. The following facts the government and the defendant have stipulated to as far as the crime. The defendant moved to Powell, Knox County in the Eastern District of Tennessee around 2005. Defendant held himself out as a well-to-do businessman, owner of Masterworks Media and Entertainmant LLC, (masterworks.) The defendant alleged the "business" was

located at the home the defendant rented located at 717 Tate Trotter Road, Powell, Tennessee. Specifically on or about February, 2007 until December of 2011 the defendant perpetrated a scheme whereby committing multiple acts of wire fraud and money laundering. The defendant ingratiated himself into

religious communities and then used the religious affiliations to perpetrate his scheme by lulling people into investing in or making loans to this company. The

defendant would inform his victims that if they invested in securities in Masterworks, the money would be used for business activities. Neither Masterworks, nor the

defendant were registered to sell securities. For other victims the defendant presented the 12

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 investment scheme under the guise of a short-term loan guaranteeing high rates of returns, as well as the initial investment. Once the money was wired into the

Masterworks account by the victims, the defendant immediately diverted the funds to his own personal use. Specifically in early February of 2007 victim KA was contacted about in investment opportunity with Masterworks. Defendant defrauded KA by holding himself

out as being involved in private banking and trade deals overseas, neither of which was true. KA was told if she

invested $55,000 with the defendant's company, Masterworks, there would be a 50 percent return on the investment in 30 days along with the initial investment. KA was given instructions to wire money into the Masterworks bank account. On February 21, 2007, KA wired $55,000 from her account at Washington Mutual Bank in Colorado to the Masterworks account ending in 648 with First Tennessee Bank in Tennessee. On February 22nd, 2007, after KA's money had been wired into the defendant's Masterworks account ending in 648, knowing the money was criminally derived from KA, the defendant negotiated check number 1073 on the Masterworks account ending in 648 for $55,962.30 to purchase a new Infiniti SUV for his own personal use. 13

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 To date the victim has yet to receive the initial investment or any interest. The defendants has multiple victims in multiple states in the amount of $1,078,722.32. For the purpose

of the plea agreement, the number of victims is less than ten. Your Honor, let me just point out that on page 1 when we are speaking specifically to Count 1 of the wire fraud, the amount is $1,145,254.32. incorrect. That is

It should be the amount that I stated in the

facts, being the $1,078,722.32. THE COURT: All right. Thank you. Mr. Carson

did you hear the government's case against you? MR. CARSON: THE COURT: Yes, sir. Do you agree with the government's

summary of what you did? MR. CARSON: THE COURT: Yes. Further along those lines, do you

understand and agree with the explanation of the reference to the amount in Paragraph 1 of the plea agreement should actually be the amount, as set forth in the factual basis? MR. CARSON: THE COURT: Yes, sir. Do you understand you are pleading

guilty to crimes charged in Count 1 of the Indictment, 14

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that is, wire fraud? MR. CARSON: THE COURT: Yes, sir. Do you understand the elements of

this charge against you? MR. CARSON: THE COURT: Yes. Do you understand the maximum

possible penalty for this offense, as well as any mandatory minimum? MR. CARSON: THE COURT: Yes. As to Count 1 of the Indictment

charging you with a violation of Title 18 United States Code 1343, how do you plead? MR. CARSON: THE COURT: Guilty. Do you understand you are also

pleading guilty to the crime charged in Count 7 of the Indictment, that is, money laundering? MR. CARSON: THE COURT: Yes. Do you understand the elements of

this charge against you? MR. CARSON: THE COURT: Yes, sir. Do you understand the maximum

possible penalty for this offense? MR. CARSON: THE COURT: Yes. As to Count 7 of the indictment

charging you with violation of Title 18 United States 15

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Code 1957, how do you plead? MR. CARSON: THE COURT: Guilty. Both as to Count 1 and Count 7 do

you understand what you are pleadings guilty to? MR. CARSON: THE COURT: Yes, sir. Are you offering to plead guilty

because you are in fact guilty? MR. CARSON: THE COURT: Yes, sir. Mr. Carson, if your plea is

accepted, you will be adjudged guilty of a felony, and this may deprive you of valuable civil rights such as the right to vote, to hold public office, to serve on a jury and to possess any kind of firearms. The Court also advises you that the court is required to consider any applicable sentencing guidelines, but may vary from those guidelines under some circumstances. Have you had the opportunity to discuss with your attorney the possible application of these advisory guidelines to your case? MR. CARSON: THE COURT: Yes, sir. In addition, if the Court accepts

your plea of guilty, a judgment of conviction will result, and this conviction may be used against you in the future, if you should be convicted in any subsequent 16

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 proceeding, to enhance or increase any sentence that you might receive for any future offenses that you might commit. In other words, your guilty plea in this case

could hurt you in the future in the event of future wrongdoing. Do you understand that? Yes, sir. Do you also understand except to

MR. CARSON: THE COURT:

the extent of what I have described today, you will not be permitted to withdraw your plea on the basis of the sentence you might receive? MR. CARSON: THE COURT: Yes. The Court will not be able to

determine the overall appropriate sentence until it has received the Presentence Report which you and the government will have an opportunity to consider and challenge the facts in that report. Under some circumstances, the government may have the right to appeal the sentence imposed by this court. The court advises you that parole has been abolished and if you are sentenced to prison, you will not be released on parole. Mr. Carson, are you presently on probation as to any previous offense? MR. CARSON: No, sir. 17

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Are you presently on parole from

any jail or penal institution? MR. CARSON: THE COURT: No, sir. The Court is also required to

inform you that as a condition of any period of supervised release or probation that might be imposed, such probation or supervised release will be revoked should you be found in possession of any controlled substance or of a firearm. under federal law. This revocation is mandatory

Knowing these various penalties do

you still wish to plead guilty? MR. CARSON: THE COURT: Yes, sir. The Court has observed the

appearance of this defendant and his responsiveness to the questions asked. Based upon these observations and

the answers, the Court finds that the defendant, Mr. Freddie Marshall Carson, is in full possession of his faculties and is competent to plead guilty. The defendant is not under the influence of narcotics, or other drugs or alcohol; The defendant knowingly waives his constitutional rights to trial and other rights accorded to persons accused of crime; The factual basis for the guilty plea has been established and the defendant understands the nature and 18

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accepted. elements of the offenses to which the plea is offered and the maximum penalties provided by law for the offenses. The defendant has offered to plead guilty knowingly and voluntarily. Accordingly, the plea of guilty will be And the defendant is hereby adjudged guilty

of violating Title 18 United States Code 1343, that is, on the dates listed on Page 4 of the Indictment in this case, and as stated here today, within the Eastern District of Tennessee and elsewhere, the defendant devised a scheme to defraud or to obtain money or property by materially false or fraudulent pretenses, representations or promises or willfully participated in such a scheme with knowledge of its fraudulent nature with the intent to defraud, and that in advancing, furthering or carrying out this scheme the defendant transmitted a writing, signal or sound by means of a wire, radio or television communication in interstate commerce or caused such transmission of a writing, signal or sound of some kind by means of a wire, radio or television communication in interstate commerce. The defendant is also hereby adjudged guilty of violating Title 18 United States Code 1957. That is,

on the dates listed on Page 5 of the Indictment and 19

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stated here today within the Eastern District of Tennessee and elsewhere the defendant obtained money proceeds of a suspicious unlawful activity derived from criminal conduct and the defendant knowingly engaged in or attempted to engage in a monetary transaction with those proceeds involving a financial transaction, such transaction in an amount greater than $10,000. Mr. Carson, do you understand you will be asked to give information to the probation officer for the Presentence Investigation Report and you may have your attorney present with you at that time, if you wish? MR. CARSON: THE COURT: Yes, sir. You and your attorney will be

permitted to read the Presentence Report before the sentencing hearing. Counsel for the parties are

directed to local rule 83.9(c) with respect to the filing of objections and/or responses to the report. Additionally, pursuant to local rule 83.9, the Court reminds the parties that motions for departure under the guidelines, motions or request for variances and sentencing memoranda must be filed with the Court at least seven days before the sentencing hearing. Mr. Carson, you are advised that both you and your attorney will be permitted to speak on your behalf at the sentencing hearing. 20

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August 1, 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 21 Case 3:12-cr-00017 Document 35 Filed 05/01/13 Page 21 of 21 PageID #: 140 I CERTIFY THAT THE FOREGOING IS AN ACCURATE TRANSCRIPT OF THE RECORD OF PROCEEDINGS IN THE ABOVE-ENTITLED MATTER. With respect to a date for that hearing, let me suggest Thursday, November 29 at 2:00 p.m. work for everyone? MR. HUTSON: MS. KOLMAN: THE COURT: Yes, Your Honor. Yes. We'll set sentencing, subject to does that

calendaring change, for Thursday November 29, 2012, at 2:00 p.m. Is there any issue as to this defendant

remaining on bond pending sentencing? MS. KOLMAN: THE COURT: No, Your Honor. Okay. The Court will so order.

Any other matters to take up at this time, Ms. Kolman, on behalf of the government? MS. KOLMAN: THE COURT: MR. HUTSON: THE COURT: No, Your Honor. Mr. Hutson, on behalf of defendant? No, Your Honor. We'll stand in recess.

Thank you everyone. (Court was recessed.)

Jolene Owen

Digitally signed by Jolene Owen DN: cn=Jolene Owen, ou=Federal Judiciary, o=U.S.Government, c=US Date: 2013.05.01 08:32:34 -04'00'