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United States v. Wagner

United States District Court, E.D. Virginia, Newport News Division

December 19, 2017

UNITED STATES OF AMERICA
v.
DEBORAH WAGNER, Defendant.

          OPINION AND ORDER

          Robert G. Doumar, Senior United States District Judge.

         This matter comes before the Court on the United States' ("Government") Motion to Dismiss or, in the Alternative, for Summary Judgment with Respect to the Petition of the Defendant's Minor Child. ECF No. 114. For the reasons stated herein, the Government's Motion to Dismiss the Petition of the Defendant's Minor Child is GRANTED, and the Petition of the Defendant's Minor Child is hereby DISMISSED WITH PREJUDICE.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On October 15, 2015, a grand jury named Deborah Wagner ("Defendant") in an eleven-count indictment. It also cited forfeiture of assets pursuant to 18 U.S.C. §§ 981 and 982, and 21 U.S.C. § 853(p). ECF No. 11. On September 9, 2016, Defendant pled guilty to Count One, Conspiracy to Commit Mail and Wire Fraud, in violation of 18 U.S.C. § 1349. ECF No. 49.

         According to the Agreed Statement of Facts, Defendant and her co-conspirators engaged in a scheme that recruited straw purchasers to serve as grantees in fraudulent transfers of timeshare units. From 2011 to 2013, Defendant and her employees, acting in and through her law firm, Wagner & Hyman, provided third party transfer services to GoodBye Timeshare, owned and operated by Brendan Hawkins. Statement of Facts, ECF No. 51 ¶¶ 2-3. From August 2013 until the end of 2013, Defendant provided similar services to Exotic Equity Transfers, owned and operated by Keith Kosco. Id. ¶¶ 2, 4, 9. Mr. Kosco and Mr. Hawkins, through their respective companies, would charge the original owners a substantial fee to transfer their timeshare units (usually three times the maintenance fees) while assuring the original owners that such transfers were legal and legitimate. Id. ¶¶ 6-7. Defendant's role was to aid in the transfer to straw purchasers by having a fraudulent deed and contract produced to document the sale. Id. ¶ 14. Defendant and her co-conspirators were aware that the straw purchasers had neither the ability nor the intention of satisfying the financial obligations of timeshare unit ownership. Id. ¶ 11. For instance, at least one of the many straw purchasers was a jail inmate who did not know the conspirators were transferring units into her name. Mr. Hawkins and Mr. Kosco, through their companies, paid fees to Defendant and her law firm for her role in the scheme. Id. ¶ 10.

         When resorts began objecting to certain transfers because of the repeated use of a straw purchaser, Defendant, her employees, and others would attempt to shift the transfer into the name of another straw purchaser. Id. ¶ 21. In addition, Defendant formed a separate nominee company, Vacation Match, LLC, with a business address at the location of a tanning salon she owned, for the purpose of finding new straw purchasers (many of these straw purchasers were paid between $20 and $50 for the use of their identities). See Virginia Corporate Records, ECF No. 61-5. The straw purchasers did not pay their fee obligations, resulting in losses of $2, 050, 739.29 to fourteen resorts. See Statement of Facts, ECF No. 51 ¶ 29; Losses by Resort, ECF No. 92-5.

         On July 20, 2017, this Court sentenced Defendant to imprisonment for fifty (50) months. ECF No. 85. At that time, the Court also entered an agreed Preliminary Order of Forfeiture and recognized that the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663A, applied. After briefing and a hearing, the Court ordered Defendant to pay restitution in the amount of $1, 845, 665.36. ECF No. 120.

         In the meantime, beginning August 14, 2017, and ending September 12, 2017, the Government continuously published notice of forfeiture as to the assets listed in the Preliminary Order of Forfeiture, as required by 21 U.S.C. § 853(n)(1) and Federal Rule of Criminal Procedure 32.2(b)(6). ECF No. 111-1. The Government also mailed notice to entities that the Government knew may have an interest in the property. ECF No. 117. Three people/entities filed timely petitions asserting interests in the forfeited property:

1. Chesapeake Bank filed a petition asserting an interest in 112 Peyton Road, Williamsburg, Virginia, in the amount of $19, 667.59, ECF No. 100;
2. Mortgage Electronic Registration Systems, Inc. as designee for Wells Fargo (hereinafter "MERS") filed a petition asserting an interest in 112 Peyton Road, Williamsburg, Virginia in the amount of $308, 810.45 and an interest in 53 Summer East, Williamsburg, Virginia in the amount of $109, 151.28, ECF No. 106; and
3. Dale and Carole Wagner, as guardians of Defendant's minor child, filed a petition asserting an interest for the child in 112 Peyton Road, Williamsburg, Virginia in an unspecified amount. ECF No. 101.

         The Government subsequently filed a status report stating it acknowledged and had no objection to the petitions filed by Chesapeake Bank and MERS; it only opposes the petition filed on behalf of Defendant's minor child. ECF No. 117.

         On October 25, 2017, the Government filed the instant Motion to Dismiss or, in the Alternative, for Summary Judgment with Respect to the Petition of the Defendant's Minor Child.

         ECF No. 114.[1] On November 9, 2017, Defendant's minor child, through guardians, mailed his or her response to the Government's motion. ECF No. 118 at 4. The Government replied on ...


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