United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING GOVERNMENT'S EX PARTE APPLICATION
FOR POST-INDICTMENT RESTRAINING ORDER [DKT. NO. 134] AND
POST-INDICTMENT RESTRAINING ORDER ENJOINING PROPERTY SUBJECT
PAGE HOOD CHIEF JUDGE
September 13, 2017, the Government filed an Ex Parte
Application for Post-Indictment Restraining Order pursuant to
21 U.S.C. § 853(e)(1)(A) (the
“Application”). Dkt. No. 134. The Application
seeks to preserve the availability of real property located
at 2990 W. Grand Boulevard in Detroit, Michigan, as well as
any rental income generated from that property (collectively,
the “Restrained Property”). The Government
asserts that the Restrained Property is subject to criminal
forfeiture as proceeds of Defendant's health care fraud
and because the Restrained Property is traceable to property
(funds) involved in money laundering.
filings related to the Application have been made by the
Government, Defendant and a third party, Bank of America. On
September 6, 2017, Defendant filed a Memorandum in Support of
Appointing a Receiver for the 2990 W. Grand Boulevard
property, Dkt. No. 128, and the Government filed a
Supplemental Brief regarding a Request to Pay Detroit Edison
Bill (previously filed by Defendant). Dkt. No. 129. On
September 12, 2017, the Government filed a Second Forfeiture
Bill of Particulars regarding properties subject to civil
forfeiture, including the 2990 W. Grand Boulevard property.
On September 13, 2017, Bank of America filed a Notice of
Appearance as an Interested Party and a Miscellaneous Case
Number (17-51250) was assigned for purposes of any filings by
Bank of America (both of which were noted on the docket for
this case by minute entry dated September 13, 2017). On
September 13, 2017, Defendant filed a Memorandum Supplement
in Support of Appointing a Receiver for the 2990 W. Grand
Boulevard property. Dkt. No. 133.
September 13, 2017, the Government filed the Application,
including a sealed exhibit (an affidavit of FBI Special Agent
Stephen Osterling) in support of the Application. Dkt. Nos.
134, 135. On September 19, 2017, Bank of America filed a
Response to the Application. Dkt. No. 5 in Case No. 17-51250.
On September 19, 2017, Defendant filed a Response to the
Application, Dkt. No. 143, and the Government filed a Reply
to the Responses of Defendant and Bank of America on
September 20, 2017. Dkt. No. 144. The Court has reviewed and
considered all of the foregoing filings.
U.S.C. § 853(e)(1) provides that the Court may enter a
restraining order upon the filing of an indictment:
Upon application of the United States, the court may enter a
restraining order or injunction, require the execution of a
satisfactory performance bond, or take any other action to
preserve the availability of property….for forfeiture
under this section-
(A) upon the filing of an indictment or information
charging a violation….for which criminal forfeiture
may be ordered under this section and alleging that the
property with respect to which the order is sought would,
in the event of conviction, be subject to forfeiture under
this section; . . .
purpose of pre-trial restraint of property is to preserve the
availability of property that can be forfeited after trial.
In re Billman, 915 F.2d 916, 921 (4th Cir. 1990),
cert. denied, 500 U.S. 952 (1991).
Supreme Court expressly approved the restraint of assets
prior to trial in United States v. Monsanto, 491
U.S. 600 (1989), a case in which the district court
restrained, under 21 U.S.C. § 853, a defendant from
disposing of his house, his apartment, and $35, 000 in cash
prior to trial. The Supreme Court stated that:
[I]t would be odd to conclude that the Government may not
restrain property, such as the home and apartment in
respondent's possession, based on a finding of probable
cause, when we have held that…the Government may
restrain persons where there is a finding of probable cause
to believe that the accused has committed a serious offense.
at 615-16. “The return of the indictment by the federal
grand jury . . . represents a determination of probable cause
sufficient to issue a restraining order under 21 U.S.C.
§ 853(e)(1)(A) . . .” United States v.
Sellers, 848 F.Supp. 73, 75 (E.D. La. 1994); In re
Billman, 915 F.2d at 919 (“The probable cause
found by the grand jury satisfies the government's burden
of proving the allegations of the indictment.”).
See generally United States v. Stone, 608
F.3d 939, 945 (6th Cir. 2010) (“A grand jury
indictment, by itself, establishes probable cause to believe
that a defendant committed the crime with which he is
issuance of a restraining order need not be limited to real
property, as it may extend to rental income from the real
property if the real property is purchased with proceeds
subject to forfeiture (because it is “property derived
from the proceeds”). See 18 U.S.C.
§§ 981(a)(1)(C) (“Any property, real or
personal, which constitutes or is derived from proceeds
traceable to a violation of . . . any offense constituting
“specified unlawful activity” (as defined in
Section 1956(c)(7) of this title)”); 28 U.S.C. §
2461(c), and 18 U.S.C. §§ 982(a)(1) and (7)
(“The court, in imposing sentence on a person convicted
of a Federal health care offense, shall order the person to
forfeit property, real or personal, that constitutes or is
derived, directly or indirectly, from gross proceeds
traceable to the commission of the offense.”);
United States v. Warshak, 631 F.3d 266, 332-33 (6th
Cir. 2010) (finding that when a business is solvent because
of the underlying specified unlawful activity, all of its
revenue is subject to forfeiture as proceeds derived from the
offense); United States v. Smith, 749 F.3d 465 (6th
Cir. 2014) (citation and internal quotation omitted)
(“[t]he court concluded that fraud touched everything -
from [defendant's business's] banking accounts to its
day-to-day operations - meaning that the various items
connected to [defendant's business's] revenue stream
are subject to forfeiture because the transactions all
resulted directly or indirectly from a conspiracy to commit
fraud”). An agent's affidavit may serve to
establish probable cause that the property subject to
forfeiture has the requisite connection to the underlying
crime. See, e.g., United States v. Kaley, 579 F.3d
1246, 1259 (11th Cir. 2009) (court may rely on grand
jury's finding of probable cause, supplemented by the FBI
case agent's probable cause affidavit).
showing of probable cause that Defendant committed the
underlying crime that permits forfeiture and that the subject
property has the requisite connection to that crime, the
Court has the power to enter an order restraining the
property. See Kaley v. United States, 134
S.Ct. 1090, 1095 (2014).
post-indictment restraining order under 21 U.S.C. §
853(e) may be issued ex parte, as there is no right
to a pre-restraint hearing. See e.g., United States v.
Jamieson, 427 F.3d 394, 405-06 (6th Cir. 2005)
(restraining order may be entered upon the filing of an
indictment, as a post-restraint hearing pursuant to
United States v. Jones, 160 F.3d 641 (10th Cir.
1998), is sufficient to protect a defendant's Due Process
rights); United States v. Holy Land Foundation for Relief
and Development, 493 F.3d 468, 475 (5th Cir. 2007)
(en banc) (“a court may issue a restraining
order without prior notice or a hearing”).
third-party is expressly precluded from intervening to assert
an interest in the subject property prior to the entry of an
order of forfeiture. 18 U.S.C. § 853(k) and (n). 21
U.S.C. § 853(k)(1) and (2) provide: “Except as
provided in subsection (n), no party claiming interest in
property subject to forfeiture under this section may (1)
intervene in a trial . . . of a criminal case involving the
forfeiture of such property under this section; or (2)
commence an action at law or equity against the United States
commencing the validity of his alleged interest in the
property subsequent to the filing of an indictment .
. . alleging that the property is subject to forfeiture under
this section.” (emphasis added). 21 U.S.C. §
853(n)(1) and (2) provide: “(1) Following the
entry of an order of forfeiture under this section . . . (2)
[a]ny person, other than the defendant, asserting a legal
interest in property which has been ordered forfeited to the
United States pursuant to this section may . . . petition the
court for a hearing to adjudicate the validity of his alleged
interest in the property. . . .” (emphasis added). 21
U.S.C. § 853(n)(6) provides, in part: “If,
after the hearing, the court determines that the
petitioner has established by a preponderance of the
evidence” a right to the property, “the court
shall amend the order of forfeiture in accordance with its
determination.” (emphasis added).
expressly provided by 18 U.S.C. § 853(k) and (n), Bank
of America has no right or ability to challenge the
Application or the entry of the post-indictment restraining
order requested by the Government. In United States v.
Huntington Nat. Bank, 682 F.3d 429 (6th Cir. 2012), the
critical case Bank of America cites in support of its rights
as the holder of a security interest in the 2990 W. Grand
Boulevard property, the court addressed only whether that
secured creditor was eligible to qualify as a bona fide
purchaser for value after the district court had
entered a preliminary order of forfeiture. The
Huntington decision has no bearing on the issue
before the Court. Similarly, Defendant has no right to a
pre-restraint hearing. See, e.g., Jameison, 427 F.3d
at 405-06. Accordingly, for purposes of determining whether
to grant the Application, the Court does not take into
account the arguments of Defendant or Bank of
Court has reviewed the Application and FBI Agent
Osterling's affidavit. The Court finds that the
Government has established probable cause that Defendant
committed the underlying crimes and that the Restrained
Property has the requisite connection to the underlying
crimes. Because the Court has reached that conclusion, it
enters an order restraining the property. Kaley v. United
States, 134 S.Ct. 1090, 1095 (2014).
Court makes the following specific findings:
Pursuant to 21 U.S.C. § 853(e)(1), this Court is
authorized to enter an ex parte restraining order or
injunction, require the execution of a satisfactory
performance bond, or take any other action to preserve the
availability of property subject to forfeiture.
July 6, 2017, a federal grand jury in the Eastern District of
Michigan initiated the instant criminal action by returning a
10-count indictment charging Defendant and several others
with conspiring and engaging in an illegal health care fraud
scheme from December 2008 through July 2017 to defraud a
health care benefit program (Medicare) in violation of 18
U.S.C. §§ 1347 and 1349, as well as engaging in an
illegal kickback scheme to further the health care fraud. In
addition, Defendant was charged with engaging in money
laundering in violation of 18 U.S.C. § 1957. Dkt. No. 1.
indictment also contains a criminal forfeiture allegation,
alleging that certain real and personal properties are
subject to forfeiture to the Government upon Defendant's
conviction, pursuant to 18 U.S.C. §§ 981(a)(1)(C)
and 28 U.S.C. § 2461(c), and 18 U.S.C. §§
982(a)(1) and (7), because they are property, real or
personal, involved in the money laundering offense, or are
traceable to such property, and/or constitute or are derived,
directly or indirectly, from gross proceeds traceable to the
commission of a health care offense, including conspiracy.