United States District Court, E.D. Virginia, Norfolk Division
OPINION AND ORDER
S. DAVIS UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant Daryl G. Bank's
("Bank" or "Defendant") Motion to Modify
Bond to Permit Sale of Family Home, ECF No. 55, and Motion
for Reconsideration, ECF No. 54. For the reasons noted below,
Bank's Motion for Reconsideration is
DENIED, ECF No. 54, and his Motion to Modify
Bond to Permit the Sale of Family Home is
DISMISSED for lack of subject matter
jurisdiction, ECF No. 55.
August 23, 2017, Defendant was charged along with one
co-defendant with the following counts: conspiracy to commit
mail and wire fraud, in violation 18 U.S.C. § 1349
(Count 1); mail fraud, in violation of 18 U.S.C. § 1341
(Counts 2-4); wire fraud, in violation of 18 U.S.C. §
1343 (Counts 5-11); and unlawful monetary transactions, in
violation of 18 U.S.C. § 1957 (Counts 12-14). ECF No. 4.
These charges arise from allegations that Bank and others
executed a scheme to defraud investors of millions of dollars
over a period of five years. Id. According to the
indictment, the scheme resulted in a loss to investors that
exceeded $20 million. Id. at 22.
August 24, 2017, federal authorities arrested Bank in
Florida. Gov.'s Opp'n Mot. Amend. Cond. Release 2,
ECF No. 37. Defendant's initial appearance occurred on
August 25, 2017, before United States Magistrate Judge
Shaniek M. Maynard of the Southern District of Florida.
United States v. Daryl G. Bank, 2:17mj89 (S.D.
Fla.), ECF No. 4. At his initial appearance, Defendant was
represented by his current counsel, Jason M. Wandner. See
id. At the hearing, the Government moved for detention
based on both a risk of flight and danger to the community.
Defendant elected to have his detention hearing in the
Southern District of Florida, and the Court scheduled the
hearing for August 30, 2017. Id.
August 30, 2017, Judge Maynard held an extensive detention
hearing. See Det. Hr'g Tr., ECF No. 37-1. During
argument at the hearing, Judge Maynard was particularly
interested in whether Defendant had fully disclosed the
extent of his assets to the Court's Pretrial Services
Officer. Id. at 102. In response to questioning by
the Court, the Government noted that Defendant had failed to
disclose his interest in a North Carolina trailer park
("The McPherson Property"), as well as a rental
property in Port St. Lucie, Florida ("the Florida rental
property") in which codefendant Raeann Gibson was
apparently living prior to her arrest. Id. at
102-03. During defense counsel's argument, the Court
explained its concern:
The one issue that I am having is apparently when asked by
Pretrial Services about his access [sic], he did not talk
about the house that he owns that Ms. Gibson stayed in, he
didn't talk about the house that he lays his head in at
night, he didn't talk about potentially another property
in the state and a partnership in a trailer park somewhere. I
mean, he didn't tell Pretrial Services that.
. . . .
But would you agree that if this Court were to set a bond,
the Court would have to feel confident that when asked by
Pretrial Services about whatever Pretrial Services needs to
ask him about, he's not going to have to talk to his
accountants and lawyers to be honest about what he has. I
mean, part of what the Court has to look at is whether
he's going to show up as he needs to, he's going to
follow the conditions that we set, and whether he's not
hiding something out there that can be used to flee. So I
think candidness with the Pretrial Services office if this
Court sets a bond is pretty important.
Id. at 109-110. The Court ultimately denied the
Government's motion to detain Defendant and set a bond,
citing Defendant's lack of criminal history and stable
family history. Id. at 13 0-131. The Court also
noted, "the more significant issues that the Court has
with Mr. Bank involve his ability to follow court orders and
to demonstrate that he respects the judicial process, "
and emphasized its concern about "the apparent lack of
candor in talking to Pretrial Services about his
assets." Id. at 132-34. The Court set a bond
consisting of a $300, 000 personal surety bond, which was to
be co-signed and collateralized, and a $250, 000 corporate
surety bond. Id. at 135-136. The Court also declined
to allow Defendant to put his home up to collateralize the
bond apparently because the Court found the Government's
allegations that the home's mortgage had been paid with
fraud proceeds to be credible. Id. at 137-38.
December 17, 2017, Defendant filed the Motion for Amendment
of Conditions of Release. ECF No. 35. In his motion,
Defendant asked the Court to review Magistrate Judge
Maynard's bond order and either permit him to use
"real property which he owns in North Carolina as well
as his residence in Florida as collateral for his bond,
" or lower the amount of the bond. Id. at 3
(emphasis added) . Bank also noted that the McPherson
property had an appraised value of "over $1, 000,
000.00" and that his Florida residence had equity of
approximately $225, 000. Id.
January 18, 2018, this Court issued an opinion denying
Defendant's motion. ECF No. 44. The Court noted that
Defendant's lack of candor regarding the McPherson
property undermined his suggestion that he should be able to
use such property to satisfy his bond. Id. at 1-2.
The Court further found that the Florida residence would not
provide sufficient security to cover the bond. Id.
February 20, 2018, Defendant filed the instant Motion to
Reconsider. ECF No. 54. In his motion, Defendant asserts that
the Florida rental property and the McPherson properties are
both owned by limited liability companies ("LLCs"),
and that, as a mere agent and shareholder of the LLCs, he
does not have an ownership interest in either property.
Id. at 2. He cites DeJesus v. A.M.J.R.K.
Corp, Case No. 2D17-2374, 2018 Fla. WL 793441, *5 (Fla.
Dist. Ct. App. 2018) to argue that Florida law recognizes
that a shareholder of an LLC does not "possess any
ownership interest in the assets of the LLC [. ]"
Id. at 2. Accordingly, Defendant claims that because
he does not possess any ownership interest in the McPherson
and Florida rental properties, his failure to disclose them
cannot be held against him. Id. He asserts that,
“[u]nder Florida law, his failure to make disclosures
to the pre-trial officer was not evasive or incorrect, "
and he therefore requests that the Court reconsider its prior
Government filed its opposition to the Motion to Reconsider
on March 6, 2018. ECF No. 56. Therein, the Government notes
that Defendant had previously averred that he owned the
McPherson and Florida rental properties when he offered them
as collateral in his Motion for Amendment of Conditions of
Release. See id. at 4. The Government also points
out that the Supreme Court of Florida has held that
“[a]n ownership interest in an LLC is personal
property." Id. at 5 (citing Olmstead v.
F.T.C., 44 So.3d 76, 80 (Fla. 2010). By omitting
information about the value of his ownership interests in the
LLC, Bank failed to make a full disclosure of his assets to
the Pretrial Services Officer. The Government concludes that
"Defendant's word games do nothing to alter the