United States v. Carmen Johnson
683 F. App'x 241
| 4th Cir. | 2017Background
- Carmen Johnson operated credit-repair businesses (Able Estate, Restoration One, CJ Lending) that submitted fabricated tradelines to Experian to improve clients’ credit for fees; over 2,000 clients were involved.
- Separate post-seizure investigations uncovered that Johnson also assisted real estate agents (Tibakweitira and Ligate) by creating false credit histories and loan-application materials to obtain mortgage proceeds on straw-buyer purchases.
- In March 2011 the Government obtained a §853(p) seizure warrant and seized $515,967.64 from Johnson’s business accounts; the warrant affidavit described the seized funds as substitute assets and referenced a “forthcoming indictment.”
- Johnson was later indicted (Case 13-294 and consolidated Case 14-352) for conspiracy to commit wire fraud, wire fraud, and making false statements on loan applications; she proceeded largely pro se with standby counsel.
- Before trial Johnson moved to recover the seized funds to hire counsel; the district court denied a hearing and relief under Rule 41(g). After a seven-day trial a jury convicted Johnson on 24 counts; she was sentenced to 57 months and restitution of $2,315,660.94.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Proper framework and entitlement to evidentiary hearing for return of seized funds | Johnson: seizure arose from same investigation as her indictment, so Farmer (post‑indictment) standards apply and she was entitled to a Farmer hearing because funds were untainted and needed to hire counsel | Government: seizure was from a separate credit-reporting investigation (pre‑indictment) so Rule 41(g)/Richey analysis applies; funds were proceeds (tainted) not substitute assets | Court: seizure was from a separate investigation; Johnson failed to show funds were untainted, so no Farmer hearing required and denial of relief under Rule 41(g) was proper |
| 2. Denial of a continuance when standby counsel sought to step in four days before trial | Johnson: denial effectively deprived her of counsel because standby counsel lacked time to prepare | Government: delay caused by Johnson’s pro se choice and late request; counsel had notice and months to prepare | Court: no abuse of discretion; defendant caused the timing and failed to show specific prejudice |
| 3. Sufficiency of evidence for conspiracy and substantive counts | Johnson: she only provided tradelines on request and lacked knowledge of conspiracy purpose (mere buyer–seller relationship) | Government: testimony and documents showed Johnson knowingly fabricated credit histories for use in mortgage closings and had ongoing relationships with realtors to further the fraud | Court: evidence was sufficient; reasonable jury could find Johnson knowingly participated in the mortgage‑fraud conspiracies |
| 4. Sentencing loss amount attribution | Johnson: loss should be limited (e.g., to transaction gains) and not the full lender losses | Government: loss equals actual losses suffered by lenders after foreclosures; reasonably foreseeable consequence of Johnson’s role | Court: district court’s loss calculation (total lender losses $2,315,660.94) was reasonable and attributable to Johnson under §1B1.3 and Guidelines rules |
Key Cases Cited
- United States v. Farmer, 274 F.3d 800 (4th Cir.) (pretrial adversary hearing required if defendant shows government seized untainted assets needed to hire counsel)
- Richey v. Smith, 515 F.2d 1239 (5th Cir. 1975) (four‑factor test for Rule 41(g) motions addressing pre‑indictment seizures)
- United States v. Jones, 160 F.3d 641 (10th Cir.) (framework adopted in Farmer concerning asset restraints and hearings)
- Caplin & Drysdale v. United States, 491 U.S. 617 (1989) (criminal forfeiture may bar use of seized assets to pay counsel)
- Luis v. United States, 136 S. Ct. 1083 (Sup. Ct.) (Sixth Amendment protection requires heightened scrutiny where restrained assets are not traceable to crime)
- United States v. Engle, 676 F.3d 405 (4th Cir.) (standard of review and definition of substantial evidence for sufficiency challenges)
- United States v. Bolden, 325 F.3d 471 (4th Cir.) (loss attributable to defendant includes reasonably foreseeable acts of co‑conspirators)