United States District Court, E.D. Virginia, Alexandria Division
City Of Alexandria, Interested Party: George McAndrews, LEAD
ATTORNEY, Office of the City Attorney, Alexandria, VA.
USA, Plaintiff: Kimberly Riley Pedersen, LEAD ATTORNEY,
Gordon D. Kromberg, Karen Ledbetter Taylor, United States
Attorney's Office, Alexandria, VA; Allison Ickovic, U.S.
Attorney's Office (Alexandria-NA), Alexandria, VA.
O'Grady, United States District Judge.
matter comes before the Court on the Government's Motion
for Preliminary Order of Forfeiture. Dkt. 601. The Government
moves to have the individual defendant Arkadiy Bangiyev
(" Arkadiy" ) forfeit
at least $20,000,000.00 and several specific assets. Dkts.
683, 694-9-10. For the reasons set forth below, the Motion as
to Arkadiy is GRANTED in part.
2004 until 2014, a criminal organization manufactured
counterfeit United States currency representing tens of
millions of dollars. The United States Secret Service ("
USSS" ) identified defendant Arkadiy Bangiyev ("
Arkadiy" ) as a member of this enterprise after
conducting a lengthy investigation that included
approximately nine months of court authorized phone wiretaps.
On August 7, 2014, a grand jury returned a two count
indictment against Arkadiy and others whom the USSS had also
identified as being involved in the criminal organization.
Dkt. 203. Count One of the Superseding Indictment charged
Arkadiy with participating in a Racketeer Influenced and
Corrupt Organization (RICO) conspiracy in violation of 18
U.S.C. § 1962(d). Id. Count Two charged Arkadiy
with participating in a conspiracy to commit counterfeiting
offenses in violation of 18 U.S.C. § § 371, 471,
472, 473, and 474. Id. Also included in the
Superseding Indictment was a forfeiture allegation advising
the defendants that if they were convicted of Count One the
Government would seek the forfeiture of various property the
defendants acquired or maintained in violation of 18 U.S.C.
§ 1962. Id. at 22.
January 15, 2015, Arkadiy pled guilty to Count One of the
Superseding Indictment. Dkt. 505. A written plea agreement
was entered in which Arkadiy agreed to " forfeit all
interests in any asset derived from counterfeiting or
racketeering that the defendant owns or over which the
defendant exercises control, directly or indirectly, as well
as any property that is traceable to, derived from, fungible
with, or a substitute for property that constitutes the
proceeds of his offense." Id. at 9. On April
20, 2015, the Government moved for a Preliminary Order of
Forfeiture against each of the defendants, Itzhak Loz, Ronen
Fakiro, Boaz Borohov, Ofra Borohov, Arkadiy Bangiyev, Eduard
Bangiyev and Johnny Lee, seeking the entry of money judgments
up to $70,474,250 with joint and several liability against
each of the defendants. Dkt. 601. The Government contends
that this sum represents the illegal proceeds that these
defendants obtained during the course of the RICO conspiracy.
Id. The Government argues that Arkadiy reasonably
knew about $20,000,000 of the proceeds and, accordingly,
moves now for a money judgment against him in that amount. In
addition, the Government moves for the forfeiture of several
The Applicable Criminal Forfeiture Law
procedure for forfeiture of assets in a criminal case is
governed by Federal Rule of Criminal Procedure 32.2. Under
this Rule, in order for a court to enter a judgment of
forfeiture following a finding of guilt or a guilty plea, the
Government must first have notified the defendant, either
through the indictment or the information, of its intent to
seek forfeiture as part of any sentence. Fed. R. Crim Pro.
32.2(a). If this notice requirement is satisfied, the
government may then pursue a forfeiture order by demanding
either specific property, a money judgment, or substitute
property. See Fed. R. Crim Pro. 32.2(b)(1)(A) &
(b)(2)(A). In cases where the government seeks specific
property, " the court must determine whether the
government has established the requisite nexus between the
property and the offense." Fed. R. Crim Pro.
32.2(b)(1)(A). When the government seeks a money judgment,
" the court must determine the amount of money that the
defendant will be ordered to pay." Id.
Whether property is subject to forfeiture in a particular
case is governed by " the applicable statute." Fed.
R. Crim. Pro. 32.2(b)(1)(A). Title 18 U.S.C. § 1963 is
the applicable forfeiture statute for RICO violations. The
RICO forfeiture statute is mandatory, Alexander v. United
States, 509 U.S. 544, 562, 113 S.Ct. 2766, 125 L.Ed.2d
441 (1993), and broad, United States v. Cherry, 330
F.3d 658, 669 n.18 (4th Cir. 2003). The Fourth Circuit has
observed that the RICO statute contains what is " by far
the most far reaching forfeiture provision, sweeping far more
broadly than the substantive RICO offense itself."
Id. In addition, a judgment of forfeiture in a RICO
case is not a separate conviction; rather, it constitutes
part of a defendant's sentence. 18 U.S.C. § 1963
(forfeiture is imposed " in addition to any other
sentence" for a violation of the RICO Act); see
also Libretti v. United States, 516 U.S. 29,
39, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995).
18 U.S.C. § 1963, a defendant who has been found guilty
or who has pled guilty to a RICO violation must forfeit to
the United States:
(1) any interest the [RICO violator] has acquired or
maintained in violation of section 1962;
(A) interest in;
(B) security of;
(C) claim against; or
(D) property or contractual right of any kind affording a
source of influence over;
any enterprise which the [RICO violator] has established,
operated, controlled, conducted, or participated in the
conduct of, in violation of section 1962; and
(3) any property constituting, or derived from, any proceeds
which the [RICO violator] obtained, directly or indirectly,
from racketeering activity or unlawful debt collection in
violation of section 1962.
18 U.S.C. § 1963(a). Section (m) of this statute also
provides for the forfeiture of substitute assets:
(m) If any of the property described in subsection (a), as a
result of any act or omission of the defendant--
(1) cannot be located upon the exercise of due diligence;
(2) has been transferred or sold to, or deposited with, a
(3) has been placed beyond the jurisdiction of the court;
(4) has been substantially diminished in value; or
(5) has been commingled with other property which cannot be
divided without difficulty;
the court shall order the forfeiture of any other property of
the defendant up to the value of any property described in
paragraphs (1) through (5).
Id. § 1963(m). In essence, under § 1963, a
court may order the forfeiture of four categories of assets:
(1) assets the defendant acquired or maintained in violation
of the RICO Act; § 1963(a)(1); (2) any interest in and
all property of any kind affording the defendant a source of
influence over the RICO enterprise, id. §
1963(a)(2); (3) all property constituting or derived from
proceeds of the racketeering activity, Id. §
1963(a)(3); and (4) substitute assets up to a certain amount,
id. § 1963(m). However, the analysis does not
stop there. " Any interests in an enterprise, including
the enterprise itself, are subject to forfeiture in their
entirety, regardless of whether some portion of the
enterprise is not tainted by the racketeering activity."
United States v. Angiulo, 897 F.2d 1169, 1211 (1st
Cir. 1990). In contrast, the forfeiture of interests outside
the enterprise, including " property that affords a
of influence over an enterprise," is subject to a rule
of proportionality. Id.; see also United States
v. Porcelli, 865 F.2d 1352, 1362-65 (2d Cir. 1989),
United States v. Horak, 833 F.2d 1235, 1242-43 (7th
Cir. 1987). Under this rule, interests outside the enterprise
" are only subject to forfeiture to the extent they are
tainted by the racketeering activity." 897 F.2d at 1211.
in a RICO case is not an in rem proceeding against
certain assets; rather, it is an in personam
proceeding against the defendant. In re Billman, 915
F.2d 916, 920 (4th Cir. 1990). Thus, " the government [
] may pursue a forfeiture order by demanding either a money
judgment, specific property, or substitute property."
United States v. Poulin, 690 F.Supp.2d 415, 420
(E.D. Va. 2010) aff'd, 461 Fed.Appx. 272 (4th
Cir. 2012). In order to obtain a forfeiture money judgement,
" [t]he government is not required to trace the proceeds
of the RICO offense into a specific bank account."
In re Billman, 915 F.2d at 920. Rather, the statute
requires forfeiture of the total profits of criminal
activity, regardless of whether those funds are still in the
defendant's possession. United States v.
Ginsburg, 773 F.2d 798, 802-03(7th Cir. 1985); see
also, United States v. Amend, 791 F.2d 1120,
1128 n.6 (4th Cir. 1986) (" The Ginsburg
reasoning is persuasive, and the government need not have
offered evidence that the forfeitable assets were still in
existence at the time of [the defendant]'s
conviction." ). Pursuant to 18 U.S.C. § 1963(m),
the provision for the forfeiture of substitute assets, "
a forfeiture money judgment can be satisfied out of any of
the defendant's assets." In re Billman, 915
F.2d at 920.
context of a conspiracy, forfeiture extends to funds obtained
by a defendant's conspirators that were reasonably
foreseeable and part of the jointly undertaken criminal
activity. Conspirators are responsible, both substantively
and at sentencing, for the " reasonably foreseeable acts
and omissions" of their co-conspirators committed "
in furtherance of the jointly undertaken criminal
activity." United States v. McHan, 101 F.3d
1027, 1043 (4th Cir. 1996) (quoting U.S.S.G. §
1B1.3(a)(1)(B)) (applying vicarious liability principles to
criminal forfeiture in drug distribution case). Because
forfeiture is " an element of the [defendant]'s
sentence," Libretti v. United States, 516 U.S.
29, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995), it follows that
conspirators are also responsible for the reasonably foreseen
proceeds obtained by their co-conspirators. McHan,
101 F.3d at 1043; United States v. Hurley, 63 F.3d
1, 22 (1st Cir. 1995) (applying this reasoning in the context
of a RICO violation).
Burden of Proof
Court next addresses the standard of proof for a RICO
forfeiture. The parties disagree over what standard the Court
should apply to this Motion. For the reasons stated below,
the Court finds that preponderance of the evidence is the
Supreme Court has made clear that forfeiture is an aspect of
the defendant's sentence, not an element of the
underlying crime. Libretti v. United States, 516
U.S. 29, at 38-39, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995). The
Supreme Court has also instructed that district courts should
use a preponderance of the evidence standard when making
factual determinations bearing on punishment. See
United States v. Watts, 519 U.S. 148, 156, 117 S.Ct.
633, 136 L.Ed.2d 554 (1997). Because a forfeiture is part of
a defendant's punishment, it follows that a preponderance
of the evidence standard is the appropriate standard to apply
to forfeiture. Therefore, a district court or jury
making a forfeiture determination need only find facts
warranting forfeiture by a preponderance of the evidence.
See United States v. Christensen, 801 F.3d
971, 2015 WL 5010591 (9th Cir. 2015); United States v.
DeFries, 129 F.3d 1293, 1312, 327 U.S.App.D.C. 181 (D.C.
Cir. 1997). The Fourth Circuit embraced this line of
reasoning in United States v. Najjar, 300 F.3d 466
(4th Cir. 2002). Although the Fourth Circuit has also
indicated in dicta that it has not yet definitively held that
preponderance of the evidence is the proper standard,
see United States v. Cherry, 330 F.3d 658,
669 n. 18 (4th Cir. 2003), this Court is persuaded by the
line of reasoning set out above and choses to follow the
preponderance standard now.