United States v. Guerrero

37 F.4th 1215

UNITED STATES of America, Plaintiff-Appellee,

v.Janet GUERRERO, Defendant,

Appeal of: Danilo Tinimbang

No. 21-2551

United States Court of Appeals, Seventh Circuit.

Argued April 14, 2022

Decided June 17, 2022

Beth A. Clukey, Attorney, Office of the United States Attorney, Chicago, IL, Darrin McCullough, Attorney, Department of Justice, Criminal Division, Asset Forfeiture & Money Laundering Section, Washington, DC, for Plaintiff–Appellee.

Edward E. Campbell, Attorney, Law Office of Edward E. Campbell, Ltd, Chicago, IL, for Appellant Danilo Tinimbang.

Before Sykes, Chief Judge, and Hamilton and Scudder, Circuit Judges.

Scudder, Circuit Judge.

Danilo Tinimbang and his then-wife Josephine started Donnarich Home Health Care, Inc. in Lincolnwood, Illinois. His ex-wife allegedly engaged in healthcare fraud and money laundering conspiracies involving Donnarich. After Janet Guerrero, one of the alleged co-conspirators, pled guilty to federal charges, the court ordered the forfeiture of assets involved with or traceable to the fraud scheme. Tinimbang made a claim to these forfeited assets based on his substantial initial investment in Donnarich. But after careful review the district court entered summary judgment for the government, concluding that Tinimbang had not carried his burden to show a vested or superior interest in the forfeited assets at the time of the underlying criminal acts. We affirm.

I

A

Tinimbang founded Donnarich in early 2005 with his then-wife Josephine and their three children, Don Michael, Richard, and Donna. He invested $811,400, became a 50% shareholder, and served as the company's president. At some point in 2006 or 2007, Josephine and others forced him out of his management role, but he maintained his equity position.

In 2005 Josephine and Richard Tinimbang incorporated Josdan Home Health Care, Inc., another home health care company. Thirteen years later, in 2018, Josephine and Richard incorporated a third home health care business, Patient Home Services of Illinois, Inc. At least some of Josdan and Patient Home Services's initial funding came from Donnarich's assets. These developments later prompted Danilo Tinimbang to assert that neither Josephine nor Richard compensated him for the asset transfers from Donnarich to the other home health care companies or for removing him as Donnarich's president.

B

In 2016 a federal grand jury in the Northern District of Illinois charged Josephine Tinimbang and others—including Janet Guerrero, an employee of both Donnarich and Josdan—with conspiracy to commit health care fraud ( 18 U.S.C. § 1349 ) and conspiracy to launder the proceeds of health care fraud and unlawful payments for patient referrals ( 18 U.S.C. § 1956(h) ). The indictment alleged that between 2008 and 2014 the conspirators used Donnarich and Josdan to bill Medicare for services rendered to purportedly homebound patients, knowing that these patients neither received nor were eligible for such services. The conspirators sought to conceal the proceeds of the fraud between 2008 and 2013, the indictment continued, by creating shell companies and depositing checks in accounts belonging to entities other than those of the intended recipients. The indictment included a notice of the government's intent to seek the forfeiture of assets involved in or traceable to the conspiracies.

Josephine Tinimbang sought to avoid prosecution by fleeing to the Philippines. Guerrero, for her part, pled guilty to the money laundering conspiracy. Pursuant to a plea agreement, Guerrero agreed to forfeit the following assets:

• $1,572,906.88 seized on or about March 5, 2014 from an account held in the name of First USA Finance and Investment at Pershing Advisor Solutions LLC;

• $1,438,050 seized on or about April 24, 2014 resulting from the sale of Facebook shares held in a Computershare account in the name of First USA Finance and Investment;

• Real property in Lincolnwood, Illinois; and

• $425,967.24 in proceeds from the sale of other real property in Lincolnwood.

At Guerrero's sentencing in January 2018, the district court entered a preliminary order of forfeiture or POF, finding that these four assets were "involved in" or "traceable to" property involved in Guerrero's offense conduct.

C

Danilo Tinimbang asserted a timely claim to the POF assets in February 2018. He did so by instituting ancillary proceedings under Federal Rule of Criminal Procedure 32.2(c), contending that he had a legal interest in the POF assets based on his initial investment in Donnarich, his removal as president without compensation, and the allegedly improper transfers from Donnarich to Josdan and Patient Home Services, the two companies formed by his ex-wife Josephine and their son Richard.

Tinimbang did not accompany his claim with any financial tracing to determine whether the POF assets derived from his initial investment in Donnarich. But the government did. During its investigation, the government enlisted the help of a Special Agent at the IRS who "reviewed the movement of funds" between the co-conspirators. This analysis "demonstrate[d] that Donnarich, Josdan, and their associated companies received millions of dollars from Medicare by enrolling non-homebound patients."

The government's analysis also revealed that Guerrero and other conspirators "used shell and ‘pass-through’ companies closely associated with Josdan and Donnarich ... to obscure the purpose of certain transactions." These shell companies engaged in several types of transactions—including purchases of stock, real estate, and cashier's checks—to launder the flow of the illicit Medicare proceeds.

With respect to the POF assets specifically identified in Guerrero's plea agreement, the government asserted that it was able to trace the resources used to purchase the assets "to funds that Medicare deposited into several individual and corporate accounts, including accounts for which Guerrero was an authorized signatory." The tracing analysis likewise revealed that the conspirators "engaged in several activities to launder the funds relating to the POF assets."

All told, the government's tracing analysis did not show that any of Danilo Tinimbang's initial investment in Donnarich went towards the purchase the POF assets. It did show, however, that $398,132 of the funds used to purchase the POF assets came from "unspecified sources." The analysis likewise established that approximately 25% of the source of funds of the POF assets was not directly traceable to the underlying Medicare fraud. But the government's analysis more generally showed that POF assets were all involved in the money laundering scheme. For his part, Tinimbang admitted that "he has no basis ... to specifically dispute any particular portion of the Government's tracing."

Relying upon this record, the district court entered summary judgment for the government. The court recognized the high burden Tinimbang bore in the ancillary proceedings—proving by a preponderance that he held "a vested or superior interest in the POF assets at the time of the criminal acts giving rise to forfeiture." Tinimbang fell short of meeting this burden, the court determined, because he identified no evidence permitting a finding that any of his funds went toward the purchase of any POF asset. From there the district court applied the relation back doctrine—under which title and legal right to forfeitable property "vests in the United States upon the commission of the act giving rise to forfeiture," 21 U.S.C. § 853(c) —and concluded that title to the POF assets vested in the United States upon the commission of the underlying fraud and money laundering offenses.

The district court underscored that its conclusion did not change even though certain assets could not be specifically traced to the underlying fraud. The court instead determined that "all of the funds used to purchase the POF assets were involved in money laundering" and were thus properly forfeitable. The court therefore entered summary judgment for the government.

Tinimbang now appeals.

II

A

In sentencing somebody convicted of money laundering under 18 U.S.C. § 1956, the district court "shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property." 18 U.S.C. § 982(a)(1). The forfeiture, in turn, is governed by 21 U.S.C. § 853(c), under which "[a]ll right, title, and interest in property [subject to criminal forfeiture] ... vests in the United States upon the commission of the act giving rise to forfeiture." 18 U.S.C. § 982(b)(1). After Guerrero pled guilty, the district court implemented these mandates by "determin[ing] what property is subject to forfeiture" and "promptly enter[ing] a preliminary order of forfeiture ... without regard to any third party's interest in the property." Fed. R. Crim. P. 32.2(b)(1)(A), (b)(2)(A).

In the ancillary proceedings challenging the forfeiture, Tinimbang shouldered the burden of showing by a preponderance of the evidence that he, as a third party, "has a legal right, title, or interest in the property" and that the forfeiture was invalid because either "the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the...