United States v. Coffman
859 F. Supp. 2d 871
E.D. Ky.2012Background
- Coffman was convicted of mail fraud, wire fraud, securities fraud, and money laundering in a scheme defrauding investors of oil/gas investments.
- The indictment included forfeiture allegations; after trial, Coffman waived jury on forfeiture issues.
- Government seeks preliminary forfeiture of 13 financial accounts, two pieces of real property, and a yacht; three accounts were preliminarily forfeited, and 4816 Chaffey Lane was denied.
- Coffman does not contest forfeiture of funds traceable to investor funds but objects to forfeiture of non-traceable funds comingled with investor funds.
- The court applies two forfeiture theories: proceeds forfeiture under 18 U.S.C. § 981(a)(1)(C) and money laundering forfeiture under 18 U.S.C. § 982(a)(1); decision addresses nexus and ownership limitations.
- The order ultimately grants forfeiture of all listed accounts, the condo, and the yacht, but denies forfeiture of the 4816 Chaffey Lane residence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nexus for money laundering forfeiture of comingled funds | Proceeds only; traceable investor funds should be forfeited | Non-traceable funds cannot be forfeited unless connected to laundering | Contested funds were involved in or facilitated money laundering; forfeiture granted |
| Proceeds forfeiture under §981(a)(1)(C) | Assets traceable to proceeds of specified unlawful activity should be forfeited | Only proceeds, not all linked assets, should be forfeited | Assets traceable to proceeds subject to forfeiture; including comingled funds where appropriate |
| Nexus for real property (Chaffey Lane) | Property used as a corporate address linked to laundering | No direct financial conduit; address alone insufficient | 4816 Chaffey Lane denied forfeiture; no nexus shown |
| Nexus for condo and yacht | Condo/yacht purchased with laundered funds; nexus established | Argues limited to proceeds, not involvement in laundering | Condo and yacht forfeited; nexus shown through money laundering and use of laundered funds |
| Scope of forfeitable property (accounts and assets) | All listed accounts/assets tied to laundering or proceeds | Objection to non-investor funds | Gave preliminary forfeiture to all other property listed; three accounts previously determined uncontested |
Key Cases Cited
- United States v. Jones, 502 F.3d 388 (6th Cir. 2007) (establishes nexus preponderance standard for forfeiture)
- United States v. McGauley, 279 F.3d 62 (1st Cir. 2002) (money laundering involves property used to facilitate laundering; includes legitimate funds in commingled accounts)
- United States v. Tencer, 107 F.3d 1120 (5th Cir. 1997) (facilitation theory of money laundering recognized; funds used to facilitate scheme may be forfeitable)
- United States v. Bornfield, 145 F.3d 1123 (10th Cir. 1998) (facilitating property includes funds used to advance laundering; commingling funds supports forfeiture)
- United States v. Huber, 404 F.3d 1047 (8th Cir. 2005) (illustrates nexus between money laundering and forfeitable property)