United States District Court, E.D. Virginia, Alexandria Division
LIAM O'GRADY, District Judge.
This matter comes before the Court on Defendant Lorene Chittenden's Motion to Lift Stay and Release Property (Dkt. No. 209) as well as the government's Motion to Forfeit Substitute Assets. Dkt. No. 210. The motions have been fully briefed by the parties. Because the Court has heard argument on the forfeiture issue on multiple occasions, including at the evidentiary hearing held on November 12, 2014, it finds additional argument unnecessary. For the reasons set forth below, both motions will be granted in part and denied in part.
The facts and procedural history of this case have been thoroughly laid out in the Court's prior opinion. Dkt. No. 206. Briefly summarized, on November 21, 2013, a federal grand jury returned a twenty-five count superseding indictment charging Defendant Lorene Chittenden and others with conspiracy to commit bank and/or mail fraud (Count I) and twenty-three counts of bank fraud (Counts III-XXV) related to their fraudulent mortgage loan scheme. The indictment included a forfeiture notice advising Defendant that if she were to be convicted of any of these offenses, she would forfeit to the United States any property constituting or derived from proceeds obtained directly or indirectly as the result of, or traceable to, the counts of conviction, or as substitute assets for those proceeds.
On May 7, 2014, after a six day trial, the jury returned a verdict finding Defendant guilty of conspiracy to commit bank fraud and ten counts of bank fraud. On October 3, 2014, the Court sentenced her to 42 months imprisonment, two years supervised release with special conditions, $1, 100 in special assessments, and to pay restitution in an amount to be determined. The Court took the forfeiture issue under advisement.
Following a hearing on whether the Federal Rules permitted the government to seek a preliminary order of forfeiture after sentencing, the Court ordered an evidentiary hearing to determine "the amount and content of the forfeiture as well as... whether the government had established the requisite nexus between the property and the offense.'" Mar. 6, 2015 Mem. Op. 2 (quoting Fed. R. Crim. P. 32.2(b)(1)(B)). Thereafter, on November 12, 2014, the Court heard evidence from a government witness, FBI Special Agent Spencer Brooks, regarding the extent of the proceeds of the fraudulent loan conspiracy as well as actions taken by the co-conspirators to dissipate those proceeds.
In light of the agent's testimony, and upon review of additional briefing from the parties, the Court found that most of the proceeds of the conspiracy were reasonably foreseeable to Defendant and thus would be included in the forfeiture order. It also found that the proceeds of certain "full doc" loans and family relationship transactions were not reasonably foreseeable to her and therefore would be omitted from the amount to be forfeited. It further held that the doctrine of joint and several liability applies to the substitute assets provision of the forfeiture statute. Due to an insufficient evidentiary showing, however, the Court ultimately denied the government's motion to forfeit substitute assets without prejudice and issued a money judgment only. It then ordered the government to "submit a proposed forfeiture money judgment order within ten days wherein it calculates the forfeited amounts approved in this opinion." The government subsequently filed a notice with the requested calculations (Dkt. No. 207), and Defendant conceded that the loans and amounts identified by the government were correct and "consistent with this Court's Memorandum Opinion." Dkt. No. 208.
Shortly thereafter, on March 31, 2015, Defendant moved to lift the post-indictment restraining order and release her property. Dkt. No. 209. The government responded the following day by filing a motion to forfeit her substitute assets, including a residential property, a BMW, and several bank and/or trust accounts. Dkt. No. 210. Both motions have been briefed by the parties and are now ripe for disposition.
To satisfy the $1.5 million money judgment previously issued by the Court, the government seeks to forfeit certain property belonging to Defendant as substitute assets. She raises three principal objections to the motion: first, she contends that the doctrine of collateral estoppel bars the government from making a second attempt to forfeit her restrained property as substitute assets; second, she asserts that Pinkerton principles limit the substitute assets provision of the forfeiture statute; and third, she maintains that the government has failed to carry its evidentiary burden to show that her property is forfeitable as substitute assets. The Court will consider each argument in turn.
A. Collateral Estoppel
Defendant first argues that the government is barred under the doctrine of collateral estoppel from seeking to forfeit her property as substitute assets because the issue has already been litigated and decided by this Court. The Supreme Court has described collateral estoppel as "mean[ing] simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit. " Ashe v. Swenson, 397 U.S. 436, 444 (1970) (emphasis added); see also Montana v. United States, 440 U.S. 147, 153 (1979) ("Under collateral estoppel, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation." (emphasis added)). Although developed in the civil context, the doctrine is embodied within the Double Jeopardy Clause of the Fifth Amendment of the Constitution and thus is equally applicable in criminal cases. Ashe, 397 U.S. at 443; United States v. Benkahla, 530 F.3d 300, 306 (4th Cir. 2008) (noting that guarantee against double jeopardy "prohibits twice prosecuting or punishing a person for the same offense" (emphasis added) (citation omitted)).
It is clear to this Court that Defendant's first objection rises and falls on the same standard she has laid out in her pleadings - that is, that there must be a "subsequent suit" for the doctrine of collateral estoppel to apply. E.g., Montana, 440 U.S. at 153; accord Ashe, 397 U.S. at 444. There is no subsequent action in this case, as the government's forfeiture motion is clearly a part of the original criminal prosecution against Defendant. Furthermore, its decision to order a money judgment did not bar the government from seeking substitute assets at a later date because once the conditions of § 853(p) are satisfied, the forfeiture of substitute assets is "not only permitted but mandated. " Mar. 2, 2015 Mem. Op. 10-11 (quoting United States v. Alamoudi, 452 F.3d 310, 314 ...