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United States v. Abramoff

United States District Court, D. Columbia.

July 14, 2014


For JACK A. ABRAMOFF, Defendant: Abbe David Lowell, Christopher D. Man, Pamela J. Marple, LEAD ATTORNEYS, CHADBOURNE & PARKE LLP, Washington, DC; Peter Robert Zeidenberg, LEAD ATTORNEY, ARENT FOX LLP, Washington, DC.

For USA, Plaintiff: M. Kendall Day, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Criminal Division, Public Integrity Section, Washington, DC; Mary K. Butler, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Public Integrity Section, Washington, DC; Nathaniel B. Edmonds, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Criminal Division, Fraud Section, Washington, DC; Oliver W. McDaniel, U.S. ATTORNEY'S OFFICE, Civil Division, Washington, DC.

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ELLEN SEGAL HUVELLE, United States District Judge.

In February 2014, the United States government seized two federal income tax refunds from defendant Jack Abramoff based on his outstanding restitution obligations in the above-captioned case. Defendant moved for the return of these funds in order to pay outstanding state income taxes and professional fees. (Def.'s Mot. for Return of Seized Tax Refund in Order to Pay Outstanding State Taxes and Accounting and Legal Fees, May 27, 2014 [ECF No. 70] (" Def.'s Mot." ), at 1.) Instead of responding to defendant's motion, the government moved for an order to show cause why defense counsel should not be disqualified. (Mot. for Order to Show Cause Why Defense Counsel Should Not Be Disqualified and to Stay Briefing Schedule Pending Resolution, June 13, 2014 [ECF No. 72] (" Gov't.'s Mot." ).) For the reasons explained below, the Court will deny the government's motion and order it to respond to defendant's motion for return of his seized tax refunds within ten days.


On January 3, 2006, Jack Abramoff pleaded guilty to a three-count criminal information. (Plea Agreement, Jan. 3, 2006 [ECF No. 4].) For these crimes, the Court sentenced Mr. Abramoff to forty-eight months in prison and three years of supervised release. (Judgment, Sept. 9, 2008 [ECF No. 48].) It also entered an order of restitution in the amount of $23,134,695.[1] ( See Restitution Order, Sept. 4, 2008 [ECF No. 43], at 1-2.) The restitution order required Mr. Abramoff to pay a percentage of his gross earnings each month " until further order of the Court or until paid in full." [2] ( Id. at 2.)

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On May 20, 2009, Mr. Abramoff's then-counsel notified the government that Mr. Abramoff, who was still incarcerated, had received a federal income tax refund of $520,189. (Def.'s Mot. at 5.) Mr. Abramoff's wife already had used part of this refund to pay outstanding taxes owed to the State of Maryland, as well as for professional services, other personal debts, and tuition for their children's private school. ( Id.) After learning this, the government moved to freeze further expenditures by Mrs. Abramoff and sought a formal accounting of all of the expenditures she had made. ( Id. (citing Mot. for Immediate Modification of Restitution Order, May 21, 2009 [ECF No. 51]).)

On August 11, 2009, the Court held a hearing on that motion. The Court concluded, without objection from the government, that Mr. Abramoff should not be penalized for the expenditures already made by his wife, explaining that " nobody is pocketing money here and doing something they're not supposed to." (Def.'s Mot. Ex. 8, Aug. 11, 2009 Hearing Transcript (" Hrg. Tr." ), at 13, 20.) At the hearing, the government also represented to the Court that if Mr. Abramoff was issued a tax refund in the future it would take steps to hold this money, " pending the Court's authorization about the distribution of funds." (Hrg. Tr. at 26-27.) After the hearing, the parties submitted a plan for the disbursement of the remaining tax refund. Based on the representations of the parties, the Court ordered that $35,000 of the refund could be used to repair the roof of the Abramoff's home; $33,000 of the refund would be paid in restitution, split evenly between the D.C. and Florida creditors; and the remaining amount of the refund could be used " by the Abramoff family to cover ordinary living expenses and professional services." ( See Order, Oct. 14, 2009 [ECF No. 59].)

On February 7 and 14, 2014, Mr. Abramoff once again received notice of significant federal tax refunds. This time, however, the United States Attorney's Office instructed the Department of Treasury to seize the entirety of these refunds in light of defendant's outstanding restitution obligations. Mr. Abramoff, now represented by Peter Zeidenberg, a partner at the Washington, D.C. office of Arent Fox LLP, filed a motion to recover these funds. (Def.'s Mot. at 1-2.) In this motion, Mr. Abramoff emphasized that he is " not requesting he be permitted to keep any portion of [the] refunds for his own or his family's personal use." ( Id. at 5.) Instead, he seeks return of these funds only to pay past due income taxes owed to the State of Maryland and fees owed to his accountants who " are solely responsible for obtaining the refund that the government has now seized and forfeited" but who " have received no payment." [3] ( Id. at 4-5.)

Instead of responding to Mr. Abramoff's motion on the merits, the government filed a motion for an order to show cause why Mr. Zeidenberg should not be disqualified from the case and to stay briefing on defendant's motion. ( See Gov't.'s Mot. at 1.) In its motion, the government argues that Mr. Zeidenberg's previous employment in the Public Integrity Section at the Department of Justice at the time Mr. Abramoff was indicted and, more importantly,

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his role as trial counsel in the case against David Safavian, the General Services Administration Chief of Staff convicted of obstruction of justice and making false statements in connection with a golf trip funded by Mr. Abramoff, disqualify him from representing Mr. Abramoff. ( Id. at 7-8.) Defendant filed an opposition arguing that the government's motion is " not only frivolous, it is brought simply to seek tactical advantage . . . ." (Def.'s Opp. to Gov.'s Mot., June 17, 2014 [ECF No. 74] (" Opp." ), at 1.) The government filed a reply. (Reply Mem. in Further Support of Gov't's Mot. for Order to Show Cause Why ...

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