887 F. Supp. 2d 649
D. Md.2012Background
- Hailey was convicted after a six-day trial of eight counts of wire fraud, 32 counts of money laundering, and two Clean Air Act violations; the government seeks a preliminary forfeiture order and writ of entry.
- Hailey’s company Clean Green Fuel sold over 32 million fake renewable fuel credits (RINs) for about $9 million, funded by wire transfers to Hailey’s accounts.
- Evidence showed 41 RIN transactions generating $9,128,375.11 in proceeds, deposited into Hailey’s M&T Bank accounts, with funds traced to Hailey’s assets.
- Investigation identified 13 Hailey-owned M&T Bank accounts; 119 indirect assets were identified as purchased with proceeds or traceable to tainted funds.
- The government seeks a money judgment for $9,128,375.11, forfeiture of assets in Counts 9–40, and indirect assets as substitutes, plus a writ of entry and insurance verification for the Catron Road real property.
- The court must determine nexus between assets and offenses, whether substitute assets are appropriate, and whether entry and insurance orders are warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government may obtain a money judgment for the fraud proceeds. | Hailey’s assets traceable to RIN proceeds. | Hailey contesting breadth of traceability to specific acts. | Yes; $9,128,375.11 ordered as a personal money judgment. |
| Whether the indirect assets are forfeitable as substitute assets. | Indirect assets largely traceable to proceeds and commingling. | Cannot confirm purchase timing or source for many indirect assets. | Indirect assets (Schedule A items 45–57) forfeitable as substitutes; others not proven. |
| Whether assets listed in Counts 9–40 are forfeitable. | Assets tied to money laundering. | Need stronger traceability to illicit funds. | Yes; assets in Counts 9–40 are forfeitable. |
| Whether a writ of entry and insurance proof are warranted. | To protect the government’s interest in forfeitable property. | No issue beyond final forfeiture. | Writ of entry granted; insurance proof required for Catron Road property. |
| Whether the government may use substitute assets or other mechanisms if third parties claim interests. | Substitute assets appropriate under 21 U.S.C. § 853(p). | Third-party claims may modify the scope. | Government may pursue substitute assets and permit third-party proceedings. |
Key Cases Cited
- United States v. Martin, 662 F.3d 301 (4th Cir.2011) (proceeds traceable to wire/fraud acts; standard for tracing funds)
- United States v. Alamoudi, 452 F.3d 310 (4th Cir.2006) (substitute assets under 21 U.S.C. § 853(p) and related standards)
- United States v. McGauley, 279 F.3d 62 (1st Cir.2002) (commingling tainted with legitimate funds permits forfeiture)
- United States v. Baker, 227 F.3d 955 (7th Cir.2000) (forfeiture of legitimate funds commingled with illicit funds if involved in offense)
- United States v. Tencer, 107 F.3d 1120 (5th Cir.1997) (general forfeiture framework; substantive standards)
- United States v. Parcels of Land, 903 F.2d 36 (1st Cir.1990) (forfeiture of parcels related to offense)