United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
M. Hood Senior U.S. District Judge
matter is before the Court on the United States' Motion
for Preliminary Order of Forfeiture and Forfeiture Money
Judgment. [DE 102]. The defendants responded [DE 105, 108,
and 109] and the United States replied. Around this same
time, the Court received sentencing memoranda from all three
defendants and the government. [DE 106, 107, 110, and 112].
The defendants objected to the government's loss amount
for the purposes of sentencing, the amount of restitution,
and the amount the government seeks in its forfeiture motion.
While loss, restitution, and forfeiture are distinct
determinations, the testimony and evidence supporting the
government's arguments overlapped significantly.
Consequently, the Court held a hearing on October 2, 2017, at
which it received testimony and evidence on these issues. The
defendants had the opportunity to cross-examine the
government's witness and put on their own evidence at the
12, 2017, the jury in this case returned a verdict of guilty
against Joyce Minton, Aaron Brooke Warren, and James Minton
on numerous charges relating to their scheme to defraud their
employer, Clark Machine Tool & Die (“Clark
Machine”); however, they were also acquitted of a
number of counts in the Indictment. [DE 90-92] The Indictment
contains a forfeiture allegation seeking a money judgment in
the amount of the proceeds of the scheme as well as property
alleged as directly forfeitable proceeds or property involved
in/facilitating the criminal offenses. [DE 1]. The parties
agreed to waive the jury determination and agreed to let the
Court determine the forfeiture issues. See Libretti v.
United States, 516 U.S. 29, 49 (1995) (“the nature
of criminal forfeiture as an aspect of sentencing compels the
conclusion that the right to a jury verdict on forfeitability
does not fall within the Sixth Amendment's constitutional
protection.”); United States v.
O'Dell, 247 F.3d 655, 679 (6th Cir. 2001)
(if jury is waived, court must determine if defendant is
owner of property before entering order of forfeiture).
forfeiture phase of a criminal case, the United States has
the burden of establishing the forfeitability of the property
by a preponderance of the evidence. United States v.
Smith, 966 F.2d 1045, 1050-53 (6th Cir. 1992);
United States v. Jones, 502 F.3d 388, 391 (6th Cir.
2007). Property is directly forfeitable if the Court
determines that the United States has established the
requisite nexus between the property and the crime for which
the defendants have been convicted. See 21 U.S.C.
853(a); Rule 32.2(b)(1) and (2). In determining the nexus
issue, the Court may rely on evidence from the guilt phase of
the trial. United States v. Capoccia, 503 F.3d 103,
109 (2d Cir. 2007). The requisite nexus exists if the
property in question is in fact the proceeds of the offense,
constitutes facilitating property or property involved in the
offense, or has another relationship to the offense that the
applicable forfeiture statutes require. The government seeks
forfeiture pursuant to 18 U.S.C. § 982(a)(1)and (2) and
18 U.S.C. § 981(a)(1)(C). Forfeiture is mandatory, and
is not excused by the fact that the defendant dissipated the
actual money derived from the offense. Fed. R. Crim. P.
32.2(b) and (c).
to Honeycutt v. United States, 137 S.Ct. 1626
(2017), the United States does not seek joint and several
money judgments for the proceeds of the overall conspiracy.
The government requests the Court enter a money judgment
against each defendant in the amount each individual
personally obtained from the offenses for which he or she was
convicted. In calculating restitution and loss amount,
however, the Court will impose the “joint and severally
liable” formula, in which one dollar of loss may be
allocated to more than one defendant, if more than one
defendant was involved in the commission of that crime.
thoroughly reviewing and considering the evidence and
testimony presented at the hearing on October 2, 2017, the
trial exhibits and testimony, and the affidavits in the
record, the Court finds the forfeiture, restitution, and loss
amounts for each defendant as set forth below.
jury convicted Aaron Brooke Warren of 30 counts of mail
fraud, conspiracy to commit mail fraud, and 3 counts of money
laundering. Mr. Warren was acquitted of two counts of mail
fraud and one money laundering charge. The government seeks a
forfeiture money judgment in the amount of $492, 275 against
Mr. Warren. This includes over $94, 000 in charges to
Mr. Warren's company credit card for items that were sent
through the mail. There was significant, conflicting trial
testimony on which credit card charges were authorized; and,
ultimately Mr. Warren was acquitted of one count of mail
fraud related to the credit card purchases. The evidence
presented at the forfeiture hearing includes illegible copies
and notes from Sue Clark, one of the principals at Clark
Machine, who was not present at the hearing. The jury
convicted Mr. Warren of $32, 531 in mail fraud. The Court
finds there is insufficient proof on the remaining amount the
government claims should be included in the money judgment
related to the Visa and Lowe's company credit cards and
agrees with the defendant that the government has not proven
by a preponderance of the evidence that these were all
unauthorized expenditures. Furthermore, many of the receipts
entered into evidence are illegible.
Court will include the checks sent by mail to Estes
Motorsports, written by Joyce Minton and drawn on Clark
Machine's bank account, as well as the checks written to
Mr. Warren or BW Motorsports by Total Performance Solutions.
There was ample testimony at trial that supports that these
were unauthorized expenditures and part of a larger mail
fraud conspiracy, and Mr. Warren was found guilty of all
related counts in the Indictment. Also included in the
forfeiture amount is $8, 650.00 for the HVAC equipment in
Count 17. The United States claims another $43, 081 in
unauthorized checks that were part of the mail fraud scheme.
The Court finds there was lack of testimony and evidence on
these checks to conclude by a preponderance of the evidence
that these charges not included in the Indictment were part
of the scheme.
reasons stated above, the Court will enter a preliminary
money judgment against Aaron Brooke Warren in the amount of
same reasons as set forth above, the Court finds the loss
amount to be $387, 611 plus $19, 126. The additional $19, 126
represents the work done at Clark Machine for Gary Stanton
for which Clark Machine was never paid, because Mr. Warren
negotiated a deal with Mr. Stanton whereby Mr. Stanton would
“pay” for the work with racecar parts shipped to
Mr. Warren. The $4, 504 check from April 10, 2007, written to
Gary Stanton and signed by Joyce Minton is excluded from Mr.
Warren's loss amount because there is insufficient
evidence in the record to connect Mr. Warren to that
transaction. The $812.00 charged to Bruce Bennett's
account and paid in $500 cash directly to Mr. Warren is