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United States v. Bank

United States District Court, E.D. Virginia, Norfolk Division

April 26, 2018

UNITED STATES OF AMERICA,
v.
Daryl G. Bank, Defendant.

          OPINION AND ORDER

          MARK S. DAVIS UNITED STATES DISTRICT JUDGE

         This 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.

         I. Background

         On 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.

         On 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.

         On 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.

         On 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.

         On 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. at 2.

         On 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 ruling. Id.

         The 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 Court's ...


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