911 F.3d 229
4th Cir.2018Background
- Miller and his wife Wallis are alleged to have conspired to defraud three victim organizations and launder the proceeds; Wallis pleaded guilty to conspiracy to commit wire fraud before Miller was indicted.
- Miller owned two homes (Fairfax, VA and Bethany Beach, DE) purchased before the alleged conspiracy; government later restrained equity proceeds from sale of the Virginia property and placed a lis pendens on the Delaware property.
- FBI forensic accountant traced fraudulently obtained and laundered funds through multiple accounts controlled by Miller and Wallis to mortgage payments, property taxes, and property improvements.
- The grand jury indicted Miller on mail/wire fraud and money‑laundering counts and included criminal and civil forfeiture allegations seeking the two properties and sale proceeds.
- Miller sought a Farmer hearing to challenge pretrial restraint of assets he claimed he needed to retain counsel; the district court found probable cause that the assets were forfeitable and denied release.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the properties were “involved in” charged money‑laundering offenses (18 U.S.C. § 982) | Miller: properties not purchased with laundered funds; therefore not "involved in" laundering | Government: laundered funds used to improve/maintain properties, increasing equity and making them part of laundering corpus | Court: Probable cause supports that expenditures of laundered funds to improve/maintain properties made them "involved in" laundering; affirm restraint |
| Whether the properties/sale proceeds are “traceable to” fraud or laundered funds (18 U.S.C. §§ 981, 982) | Miller: tracing analysis flawed; interest payments (not principal) on mortgage not traceable to equity | Government: forensic tracing (using LIBR) ties fraud proceeds to mortgage payments, taxes, and improvements, which increased equity | Court: Tracing via LIBR was proper; payments (including interest) contributed to equity and are traceable; probable cause supports forfeiture |
Key Cases Cited
- United States v. Chamberlain, 868 F.3d 290 (4th Cir.) (procedural equivalence of pretrial asset restraint to preliminary injunction)
- United States v. Monsanto, 491 U.S. 600 (Supreme Court) (government may seize assets pending trial if probable cause of forfeiture exists even when defendant needs assets for counsel)
- Kaley v. United States, 571 U.S. 320 (Supreme Court) (appellate review limitations concerning grand jury probable cause for charged offenses)
- United States v. Kivanc, 714 F.3d 782 (4th Cir.) (property "involved in" money laundering is forfeitable in its entirety)
- United States v. Marsh, 105 F.3d 927 (4th Cir.) (real property purchased or improved with illicit proceeds can be forfeitable as involved in laundering)
- Sony Corp. v. Bank One, 85 F.3d 131 (4th Cir.) (explaining the lowest intermediate balance rule for tracing funds)
- In re Dameron, 155 F.3d 718 (4th Cir.) (tracing principles and application of LIBR)
- United States v. Leak, 123 F.3d 787 (4th Cir.) (nexus test for probable cause that assets are forfeitable)
- United States v. Herder, 594 F.3d 352 (4th Cir.) (nexus analysis does not differ between civil and criminal forfeiture theories)
- United States v. Farmer, 274 F.3d 800 (4th Cir.) (defendant’s right to a hearing to challenge pretrial seizure of assets needed to retain counsel)