United States v. Miller

UNITED STATES OF AMERICA v. DAVID HARRIS MILLER

Criminal No. 17-CR-213

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION

December 12, 2019

MEMORANDUM OPINION

On October 4, 2019, after hearing testimony from 29 government witnesses and from defendant, a jury convicted Defendant David Harris Miller of ten counts of a twelve-count indictment, including: (i) conspiracy to commit mail or wire fraud (Count 1); (ii) conspiracy to launder monetary instruments (Count 2); (iii) mail fraud (Counts 3-6); and (iv) wire fraud (Counts 7-10). The jury also returned a special forfeiture verdict finding: (i) that fraud proceeds in the amount of $315,317.10 from the sale of real property at 4551 Forest Drive, Fairfax, Virginia (the "Fairfax Property") were proceeds traceable to Counts 1 and/or 3-10; (ii) that fraud proceeds in the amount of $58,818.35 from real property at 28961 Indian Harbor Drive, Unit 3, Bethany Beach, Delaware (the "Bethany Beach Property") were proceeds traceable to Counts 1 and/or 3-10; and (iii) that the Fairfax and Bethany Beach Properties were involved in the money laundering offense charged in Count 2.

At issue now is the government's motion for a preliminary order of forfeiture entering a money judgment in the amount of $1,640,665 against defendant to be offset by the proceeds from the sale of the Fairfax and Bethany Beach Properties. Defendant opposed the government's motion.¹ After oral argument was heard, and a careful review of the record, this Memorandum Opinion grants the government's motion for the reasons from the bench and for the reasons stated below.

I.

On September 20, 2017, a grand jury returned an indictment charging defendant with twelve counts: (i) conspiracy to commit mail or wire fraud (Count 1); (ii) conspiracy to launder monetary instruments (Count 2); (iii) mail fraud (Counts 3-6); (iv) wire fraud (Counts 7-10); and (v) aggravated identity theft (Counts 11-12).

On January 3, 2018, defendant moved for an order releasing the proceeds of the Fairfax Property and removing the notice of lis pendens from the Bethany Beach Property. After an evidentiary hearing, a memorandum opinion issued denying defendant's motion. See United States v. Miller, 295 F. Supp. 3d 690 (E.D. Va. 2018). The March 8, 2018 memorandum opinion held that there was probable cause to believe that the Fairfax and Bethany Beach Properties were "involved in" the money laundering conspiracy and, in part, "traceable to" the money laundering conspiracy and the fraud charged in the indictment. Defendant appealed that decision and the Fourth Circuit affirmed, holding that probable cause supported a finding that defendant "involved the properties in money laundering transactions by spending laundered funds to improve and retain them." United States v. Miller, 911 F.3d 229, 234 (4th Cir. 2018). The Fourth Circuit also held that the Fairfax and Bethany Beach Properties were "forfeitable because they are 'traceable to' laundered funds and funds obtained through fraud under § 981." Id.

On September 24, 2019, a jury trial began on the twelve-count indictment against defendant. The government presented 29 witnesses in its case-in-chief, including forensic accountant Stacy Young, who performed an accounting analysis tracing the proceeds of defendant's frauds into improvements and payments made with respect to two properties owned by defendant. On October 2, 2019, the government rested, and defendant moved for a judgment of acquittal pursuant to Rule 29, Fed. R. Crim. P., solely with respect to the two counts of aggravated identity theft. The Court denied the motion, finding that, taking all of the evidence in favor of the government, the evidence was sufficient to sustain a conviction on the two aggravated identity theft counts.

At the beginning of defendant's case-in-chief on October 2, 2019, defendant called his wife, Linda Wallis Miller, as a witness.² Mrs. Miller's counsel appeared and invoked Mrs. Miller's spousal testimonial privilege and her Fifth Amendment privilege against self-incrimination. After hearing argument from the parties and from Mrs. Miller's counsel, the Court found that Mrs. Miller had validly invoked her spousal testimonial privilege and Fifth Amendment privilege against self-incrimination and therefore she could not be compelled to testify. Thereafter, defense counsel called defendant to testify and the trial proceeded.

On October 3, 2019, the jury began its deliberations. The next day, the jury returned a verdict finding defendant guilty of ten of the twelve counts charged in the indictment. Specifically, the jury found defendant guilty of: (i) conspiracy to commit mail or wire fraud (Count 1); (ii) conspiracy to launder monetary instruments (Count 2); (iii) mail fraud (Counts 3-6); and (iv) wire fraud (Counts 7-10). In its verdict form, the jury found defendant guilty of both concealment money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), and transactional money laundering, in violation of 18 U.S.C. § 1957. The jury deadlocked on the remaining two counts of aggravated identity theft, following which a mistrial was declared on the ground that there was a manifest necessity to do so. Following this, the government moved to dismiss the aggravated identity theft counts and its motion was granted.

Because defendant was found guilty of Counts 1-10, the question of forfeiture was required to be presented to the jury. Following the parties' arguments on forfeiture, the jury found, in a special forfeiture verdict form:

i. that the net proceeds from the sale of the Fairfax Property³ constitute proceeds or are derived from proceeds traceable to Count 1 or Counts 3-10;

ii. that the amount of traceable proceeds from the Fairfax Property is $315,317.10;

iii. that the property and improvements at the Bethany Beach Property constitute proceeds or are derived from proceeds traceable to Count 1 or Counts 3-10;

iv. that the amount of traceable proceeds to the Bethany Beach Property is $58,818.35;

v. that the Fairfax Property was involved in the money laundering offense charged in Count 2; and

vi. that the Bethany Beach Property was involved in the money laundering offense charged in Count 2.

On October 9, 2019, the government moved for a preliminary order of forfeiture requiring a forfeiture money judgment of $1,640,665 to be offset by the sale of the Fairfax and Bethany Beach Properties. Defendant opposed the government's motion and the parties argued orally on November 21, 2019.

II.

Criminal forfeiture for wire and mail fraud offenses is governed by 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c). More specifically, § 981(a)(1)C) provides for forfeiture of property "which constitutes or is derived from proceeds traceable to" mail or wire fraud under §§ 1341 or 1343 or a conspiracy to commit the same. Section 982 provides for the criminal forfeiture of property "involved in" money laundering transactions under either 18 U.S.C. § 1956 or § 1957. It also provides for the forfeiture of property "traceable to" any such property. See 18 U.S.C. § 982. Importantly, the Fourth Circuit has held, in this case, that, "[p]roperty involved in a money laundering offense is forfeitable in its entirety, even if legitimate funds have also been invested in the property." United States v. Miller, 911 F.3d 229, 232 (4th Cir. 2018) (citing United States v. Kivanic, 714 F.3d 782, 794 (4th Cir. 2013)).

As an initial matter, the jury returned a special verdict in this case finding that both defendant and his coconspirator used funds from their fraudulent activities that were traceable to the Fairfax and Bethany Beach Properties and that the properties were involved in the money laundering offense. Defendant has not challenged the special verdict on forfeiture through either a rule 29 motion to set aside the verdict or a rule 33 motion for a new trial and the time for doing so has now expired. See Fed. R. Crim. P. 29 (motions must be made within 14 days of verdict); Fed. R. Crim. P. 33 (motions on grounds other than newly discovered evidence must be filed within 14 days of verdict).⁴ To the extent defendant seeks to challenge the jury's special forfeiture verdict, his opposition to the government's motion for preliminary forfeiture is not the correct procedural vehicle and, in any event, such a challenge would be untimely under Rules 29 and 33, Fed. R. Crim. P.⁵

Additionally, this is not the first time that defendant has challenged the potential forfeiture of his property in this case. In United States v. Miller, 911 F.3d 229 (4th Cir. 2018), the Fourth Circuit held:

Because there is probable cause to find that Miller used fraudulently obtained and laundered funds to make mortgage payments and property tax payments associated with his Virginia property, and that he used funds to pay for improvements to both of his properties, probable cause exists to find that the properties are 'involved in' and 'traceable to' Miller's wire fraud and money laundering charges and are, therefore, forfeitable.

Id. at 235. Defendant has now been convicted of mail fraud, wire fraud, conspiracy to commit mail or wire fraud, and conspiracy to commit money laundering and a jury has found that the properties were both traceable to and involved in those offenses. Yet, defendant fails to discuss or even mention theFourth Circuit's decision in this case, nor does he explain why the Fourth Circuit's reasoning with respect to probable cause should not apply now that defendant has been convicted on the fraud and money laundering counts charged in the indictment. Significantly, the Fourth Circuit has already addressed and rejected defendant's argument that, because he did not purchase the properties using fraudulently obtained funds, the properties were not subject to forfeiture. On this point, the Fourth Circuit, in the 2018 appeal, held that "the statutory test does not require so much," noting that "a property involved in a money...