United States v. Kumar

UNITED STATES OF AMERICA v. SANJAY KUMAR, Defendant.

NO. 4:17-CR-5-FL-1

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA EASTERN DIVISION

October 1, 2019

ORDER

This matter comes before the court on defendant's motion seeking relief from forfeiture and release of seized real and personal property, (DE 389), and the government's corresponding motion for restraining order to prevent dissipation of assets, (DE 396). The issues raised are ripe for ruling.

I. BACKGROUND

A. Prosecution

Indictment was returned in this case on January 12, 2017. On February 22, 2018, defendant was named in a 45 count, second-superseding indictment ("indictment") charging him with the following:

1) conspiracy to unlawfully dispense and distribute oxycodone, oxymorphone, hydromorphone, and alprazolam in violation of 21 U.S.C. § 846 (count 1);

2) possession of a firearm in furtherance of a drug trafficking crime in violation of 18 U.S.C. § 924(c)(1)(A) (count 2);

3) unlawful dispense and distribution of oxycodone in violation of 21 U.S.C. § 841(a)(1) (counts 3 through 23);

4) possession of a firearm in furtherance of a drug trafficking crime in violation of 18 U.S.C. 924(c)(1)(A)(i) (count 24);

5) unlawful dispensation and distribution of alprazolam in violation of 21 U.S.C. § 841(a)(1) (counts 25 through 30); 6) engaging in monetary transactions in property derived from specified unlawful activity in violation of 18 U.S.C. § 1957 (counts 31 through 32);

7) laundering of monetary instruments in violation of 18 U.S.C.§ 1956(a)(1)(B)(I), (ii) (counts 33 through 42); and

8) attempt to evade and defeat tax in violation of 26 U.S.C. § 7201 (counts 43 through 45).

(DE 16, DE 86).

Trial concluding August 12, 2019, lasting some 26 days, including four days during which the jury deliberated its verdict, resulted in the jury finding defendant guilty of five counts of unlawful distribution of oxycodone in violation of 18 U.S.C. § 841(a)(1) (counts 3, 4, 5, 9, and 11), five counts of money laundering by concealment in violation of 18 U.S.C. § 1956(a)(1)(B)(i) and (ii) (counts 33, 34, 35, 39, and 40), and three counts of tax evasion in violation of 26 U.S.C. § 7201 (counts 43, 44, and 45). Not guilty verdicts were returned on the 32 other counts lodged against defendant, including, of particular note with respect to the instant motions, count one (the conspiracy count in violation of 21 U.S.C. § 846), and count two (the firearms count in violation of 18 U.S.C. § 924(c)(1)(A)).

Defendant's sentencing hearing is scheduled for January 6, 2020.

B. Restraint of Property

During the course of investigation and prosecution of defendant over several years, defendant's property has been restrained as follows:

1) Property seized as evidence during the execution of various search and arrest warrants at defendant's residence, office, and a storage unit, including a) a total of $594,985.00 in United States currency, which was taken into custody by the Internal Revenue Service ("IRS"); b) 36 firearms and pallets of related ammunition, takeninto custody by the New Bern Police Department ("NBPD") which are the subject of a separate civil forfeiture action, United States v. Kumar's Personal Property, No. 4:16-CV-281-FL; and c) items deemed of evidentiary value, primarily electronic devices and documents taken into either IRS or NBPD custody;¹

2) Five vehicles seized pursuant to warrants based on probable cause to believe they were subject to forfeiture, including a a) 2012 Ford F450; b) 2013 Chevrolet Silverado; c) 2014 Ford F150; d); 2014 Dodge 4WD Quad Cab Ram 1500 and e) 2016 Jeep Wrangler Unlimited;² and

3) Property subject to a consensual restraining order entered on February 27, 2017, restraining defendant from transferring, liquidating, or encumbering a) three parcels of real property as listed in the forfeiture notice of the indictment; as well as b) any funds remaining in defendant's MassMutual Individual Qualified Defined Benefit Plan #ODY15321681 after a $125,000.00 withdrawal was made to pay for defendant's legal defense.

II. COURT'S DISCUSSION

A. Motions To Be Decided

The instant motions raise a set of intertwined issues, where the government defends against any release of property also by moving for an order preventing dissipation of defendant's assets, including some assets in its custody already. The motions are summarized below.

1. Defendant's Motion (DE 389)

On August 12, 2019, defendant filed motion seeking his release from custody pending sentencing, which motion has been denied, together with the instant motion, entitled "Motion to Dismiss Forfeiture Indictment & In Rem Complaint and For Release [of] Assets Seized." Defendant argues in his motion, made pursuant to Federal Rule of Criminal Procedure Rule 41(g), that because he was found not guilty on counts one and two, forming the basis upon which the government sought forfeiture of assets, and where the total amount of criminal forfeiture based on the counts of conviction is not more than the sum of $21,000.00, defendant's assets should be released.

Defendant seeks dismissal of the forfeiture provisions of the indictment, a civil forfeiture action, and recovery of associated property including the five vehicles listed at I.B.2) above, currency and real property made mention of at I.B.1) and I.B.3), and the weapons and ammunition also referred to at I.B.1) above, together with any restrained retirement account, ostensibly including that to which reference is made at I.B.3) above.³ Defendant also seeks release of any property belonging to him otherwise seized by law enforcement together with an accounting of remaining missing property.

Remaining missing property referred to by him includes his "Monster Truck," jewelry takenfrom his person at his arrest, and gym equipment missing from his business site, as well as any other vehicle not accounted for.

Defendant offers no case law in support of his contentions. The extent of his arguments, all two paragraphs of them, are woven into his motion. Local Criminal Rules 47.1(b) and 47.2(a), require that all motions with exceptions not applicable here "shall be filed with an accompanying supporting memorandum" that will include "statement of the facts that pertain to the matter before the court for ruling" and "argument . . . relating to the matter before the court for ruling with appropriate citations." Counsel's filing on defendant's behalf is deficient.

2. Government's Motion (DE 396)

The government filed response in opposition to defendant's motion as well as a motion entitled "United States' Motion for a Restraining Order to Prevent Dissipation of Assets," aimed at securing assets sufficient to ensure payment of anticipated criminal monetary penalties expected to be awarded by the court. It rests on the All Writs Act, 28 U.S.C. § 1651, as its authority. Specifically the government targets vehicles listed at I.B.2) above;⁴ and the currency and real property made mention of at I.B.1) and I.B.3) above. It estimates the property as having equity of around $1,270,000.00. Presumably this estimate also takes into consideration amounts remaining in defendant's MassMutual Individual Qualified Defined Benefit Plan #ODY15321681, but this is unclear.

The government does not dispute the total amount of criminal forfeiture theoreticallyauthorized in this case, based on the counts of conviction, as calculated by defendant, but argues "the potential forfeiture liability pales in comparison to the substantial monetary penalties that the Defendant faces." (DE 398 at 3-4).

B. Analysis

The bulk of the parties' motions concern release or restraint by the government of defendant's five vehicles, the seized $594,985.00, the three tracts of land, and, possibly, defendant's retirement funds. The court will address this issue first, denying the government's motion for restraint of this property and granting defendant's motion for immediate release of the same. Next, the court addresses the seized weapons and ammunition, denying defendant's motion for release of these items that are subject to a separate civil forfeiture action. Finally, the court addresses the stated missing property, directing the government to provide an accounting as to these items.⁵

1. Vehicles, $594,985.00, Tracts of Land, and Retirement Funds

Section 1651(a) of Title 28 of the United States Code, the All Writs Act, provides: "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651. While the language of the Act refers to writs issued in aid of jurisdiction, the Supreme Court has held that the Act empowers district courts to issue orders or injunctions "necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained." United States v. New York Tel. Co., 434 U.S. 159, 172 (1977).

Although the United States Court of Appeals for the Fourth Circuit has not directly confronted the question whether the All Writs Act enables a court to restrain a convicted defendant's property in anticipation of ordering restitution, this court, other courts in this circuit, and courts outside this circuit "have uniformly answered this question in the affirmative." See United States v. Catoggio, 698 F.3d 64, 67 (2d Cir. 2012) (citing United States v. Sullivan, No. 5:09-CR-302-FL-1, 2010 WL 5437243, at *5-*7 (E.D.N.C. Nov. 17, 2010); United States v. Hatfield, No. 06-CR-0550, 2010 WL 4235815, at *1 (E.D.N.Y. Sept. 27, 2010); United States v. Numisgroup Int'l. Corp., 169 F.Supp.2d 133, 138-39 (E.D.N.Y.2001); United States v. Ross, No. 92-CR-1001, 1993 WL 427415, at *1 (S.D.N.Y. Oct. 15, 1993); United States v. Simmons, No. 07-CR-30, 2008 WL 336824, at *1 (E.D.Wis. Feb. 5, 2008); United States v. Runnells, 335 F.Supp.2d 724, 725-26 (E.D.Va.2004); United States v. Abdelhadi, ...