United States District Court, District of Columbia
BERYL A. HOWELL JUDGE
The defendant Michael Bikundi, Sr. ("the defendant"), his wife, Florence Bikundi, and others, are charged in a multi-count Superseding Indictment for participating in an alleged scheme to defraud the District of Columbia Medicaid Program. Incident to the government's investigation and prosecution of the defendant and his alleged co-conspirators, the government seized significant assets alleged to have been derived from or otherwise involved in the charged offenses. Now pending before the Court is the defendant's motion to vacate partially the seizure of certain of these assets in order to release a total of $132, 165.00 seized from four domestic bank accounts and one foreign bank account (the "Disputed Funds"). See Def.'s Mot. Vacate Seizure Warr. ("Def.'s Mot"), ECF No. 149. In conjunction with his motion, the defendant has requested a pretrial hearing to challenge the sufficiency of the government's evidence supporting the seizure of these funds. Id. at 1. For the reasons stated below, the defendant's request for a pretrial hearing is denied and the defendant's motion to vacate partially the seizure warrants is denied in part and granted in part.
On February 18, 2014, a U.S. Magistrate Judge of this Court issued seizure warrants for property, including sixty-four financial accounts and five vehicles, based upon a 136-page affidavit alleging probable cause to believe that the property was subject to criminal forfeiture (1) as property "involved in a transaction or attempted transaction in violation of federal criminal money laundering statutes, and (2) as property "derived, directly or indirectly, from gross proceeds traceable to the commission of a Federal health care offense, " pursuant to 18 U.S.C. §§ 982(a)(1) and (a)(7), respectively. Affidavit in Support of Seizure Warrants, dated February 18, 2014 ("First Aff.") ¶¶ 348-49, ECF No. 238-1. The affidavit also alleged probable cause to believe that the listed property was subject to civil forfeiture, pursuant to 18 U.S.C. §§ 981(a)(1)(A) and (a)(1)(C). Id.
The following day, a grand jury indicted co-defendant Florence Bikundi on multiple counts of health care fraud and money laundering. Indictment, ECF No. 1. After further investigation, the grand jury returned a Superseding Indictment, on December 18, 2014, against eight additional defendants, including Michael Bikundi, who is charged with Conspiracy to Commit Health Care Fraud, in violation of 18 U.S.C. § 1349 (Count One); Health Care Fraud, in violation of 18 U.S.C. § 1347 (Count Two); Money Laundering Conspiracy, in violation of 18 U.S.C. § 1956(h) (Count Fifteen); Laundering of Monetary Instruments, in violation of 18 U.S.C. § 956(a)(l)(B)(i) (Counts Sixteen through Twenty-Two); and Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity, in violation of 18 U.S.C. § 1957 (Counts Twenty-Three through Twenty-Five). See Superseding Indictment, ECF No. 44.
While the original indictment contained a "Criminal Forfeiture Allegation" seeking forfeiture of a real property parcel in Mitchellville, Maryland, and a general money judgment "in the amount of at least $75, 000, 000, " Indictment, Crim. Forfeiture Alleg. ¶¶ 1-2, the Superseding Indictment includes a more detailed "Forfeiture Allegation." Superseding Indictment, Forfeiture Alleg. Specifically, the Superseding Indictment seeks forfeiture, upon conviction of the health care fraud offenses alleged in Counts One, Two, Thirteen, or Fourteen,  of a money judgment "of at least $75, 000, 000, " as well as eighty-seven listed properties-for which "the Grand Jury finds by probable cause .. . [are] subject to forfeiture, " under 18 U.S.C. § 982(a)(7). Id., Forfeiture Alleg. ¶ 1. The listed properties consist of six pieces of diamond jewelry, the real property parcel in Mitchellville, Maryland, as well as almost $73, 000 in cash seized from that home, five vehicles, and funds held in seventy-four bank or other financial accounts, including the four domestic bank accounts at issue in the instant motion. Id. The Forfeiture Allegation further seeks forfeiture, without a specific grand jury probable cause finding, of property (1) "that constitutes or is derived, directly or indirectly, from gross proceeds traceable to" false statements in the submission of payment claims to the D.C. Medicaid Program, as charged in Counts Three through Twelve, under 18 U.S.C. § 982(a)(7), id. ¶ 2; and (2) that is "involved in" the money laundering offenses charged in Counts Fifteen through Twenty-Five, or "any property traceable to such property, " under 18 U.S.C. § 982(a)(1), id. ¶ 3.
On September 5, 2014, a U.S. Magistrate Judge of this Court issued a second seizure warrant based upon a 15-page affidavit alleging probable cause to believe that five additional bank accounts held at Banque Internationale du Cameroun pour l'Epargne et le Credit ("BICEC") in Cameroon, including the foreign account at issue in the instant motion, were subject to both civil and criminal forfeiture, as property "traceable to" federal health care fraud and "involved in a transaction or attempted transaction in violation of a federal money laundering offense, pursuant to 18 U.S.C. §§ 981(a)(1)(C) and 982(a)(1)(A). Affidavit in Support of Seizure Warrants, dated September 5, 2014 ("Second Aff.") ¶¶ 1, 33, ECF No. 245-1.
The government subsequently filed a Notice of Bill of Particulars for the Forfeiture Allegation in the Superseding Indictment identifying the five BICEC bank accounts listed in the Second Affidavit as subject to criminal forfeiture under 18 U.S.C. § 982(a)(7), upon conviction of an offense alleged in Counts Three through Twelve. Bill of Particulars ¶ A, ECF No. 119. The Bill of Particulars also listed ninety-two specific properties, including the eighty-seven properties identified in the Forfeiture Allegation as well as the five newly identified BICEC accounts, as subject to criminal forfeiture under 18 U.S.C. § 982(a)(1) upon conviction of an offense alleged in Count Fifteen. Id. at ¶ B.
The defendant now seeks the release of a total of $132, 165.00 previously held in four domestic bank accounts seized pursuant to the first seizure warrant and one of the BICEC accounts seized pursuant to the second seizure warrant. Def.'s Mot. at 3-5. The First Affidavit designates the four domestic accounts containing Disputed Funds as Accounts H, I, W and AA. First Aff. ¶ 1. For each account, the First Affidavit identifies a total amount of funds traceable to Medicaid payments. Id. ¶¶ 234, 236, 238, 240. In contrast to the traceable funds, however, the affidavit also lists "other" funds that are not alleged to be traceable to Medicaid payments. Id. Specifically, the First Affidavit alleges the following with regard to each account:
• Account H: Between November 2009 and December 2013, approximately $317, 241.06 was deposited into this account. Id. ¶ 234. The First Affidavit alleges that $309, 729.20 of these funds are traceable to Medicaid payments, but that "[o]ther deposits to the account include $7, 200.00 in cash and $311.86 in interest earned on the account." Id.
• Account I: Between November 2009 and January 2014, approximately $634, 929.06 was deposited into this account. Id. ¶ 236. The First Affidavit alleges that $588, 664.97 of these funds are traceable to Medicaid payments, but that "[o]ther deposits to the account include $5, 500.00 deposited from third parties, $29, 500.00 in cash deposits, and the deposit of a $10, 000 cashier's check." Id.
• Account W: Between March 2012 and November 2013, at least $140, 756.66 was deposited into this account. Id. ¶ 238. The First Affidavit alleges that $123, 688.94 of these funds are traceable to Medicaid payments, but that "[t]he rest of the funds deposited into this account consist of $8, 750.00 in checks from third parties, $8, 100.00 in cash, and $217.72 in interest." Id.
• Account AA: Between March 2012 and November 2013, at least $464, 771.16 was deposited into this account. Id. ¶ 240. The First Affidavit alleges that $430, 360.00 of these funds are traceable to Medicaid payments, but "[o]ther deposits to the account include $17, 500.00 in cash, $15, 615.00 from the sale of a vehicle, and $126.16 in interest." Id.
Finally, the defendant seeks release of Disputed Funds from a seized BICEC account, XXX-121. Def.'s Mot. at 4- 5. The Second Affidavit alleges that this account received deposits between May 12, 2008, when the defendant opened the account, and April 4, 2013, that originated in bank accounts referred to as Accounts AA and HHH in the First Affidavit. Second Aff. ¶ 14-17. To support the seizure of funds held in the BICEC account, the Second Affidavit incorporates the First Affidavit's allegations regarding Account AA and further alleges that Account HHH received funds traceable to Medicaid prior to being closed in March 2012. Id. The government has advised that the funds from BICEC account XXX-121 were transferred to a U.S. Department of Treasury Suspense Account on May 29, 2015. Gov't Supp. Br. Def.'s Mot. Vacate Seizure Warr. ("Gov't Supp. Br.") at 2-3, ECF No. 244.
Noting that the First Affidavit explicitly indicates that certain seized funds are not directly traceable to any alleged illegal conduct, the defendant asserts that the government has failed to establish probable cause that the Disputed Funds were subject to seizure and asks the Court to order their release. Def.'s Mot. at 1-5. In total, the defendant requests the release of $102, 165.00 from the four domestic accounts comprised of the following funds: (1) $62, 300.00 in cash deposits; (2) $10, 000.00 in cashier's check deposits; (3) $14, 250.00 in deposits from checks issued by unidentified third parties; and (4) $15, 615.00 in proceeds from the sale on an unspecified date of an unidentified vehicle. Id. at 4.
The defendant likewise seeks $30, 000.00 seized from the BICEC account, which funds the defendant asserts was transferred into that account from Account AA. Id. at 4-5. The defendant contends that these funds are not subject to seizure because "Account AA held funds that are not traceable to Medicaid, " id. at 5, namely, the "[o]ther deposits to the account include $17, 500.00 in cash, $15, 615.00 from the sale of a vehicle, " First Aff. ¶ 240. As the government correctly notes, however, the defendant has double-counted the BICEC funds in calculating the total amount he seeks to have released, since the same Disputed Funds that are at issue from Account AA were transferred to the BICEC account. Gov't Supp. Br. at 3 n.6. Thus, the remaining discussion will address only the Disputed Funds seized from the four domestic accounts.
As a threshold matter, the defendant asserts that access to the Disputed Funds is necessary to meet the costs of his "household necessities, " not to pay for his defense against the criminal charges. Def.'sMot. at 1. Consequently, he raises no Sixth Amendment claim that the seizure of the Disputed Funds implicates his right to counsel. Id. at 9 n.1; Def.'s Reply Gov't Opp'n Def.'s Mot. Vacate Seizure Warr. ("Def.'s Reply") at 1-2, ECF No. 195. Nonetheless, the defendant argues that examination of the First Affidavit reveals that the Disputed Funds "are not traceable to Medicaid[, ]" "are not part of the indicted offenses[, ]" and "have absolutely no nexus to the criminal activity alleged in the indictment." Def.'s Reply at2. Citing Kaley v. United States, 134 S.Ct. 1090 (2014), the defendant asserts that the continued seizure of the Disputed Funds violates the Due Process Clause of the Fifth Amendment and requests a pretrial hearing to determine their traceability to the charged criminal conduct. Id. at 1-2.
In its initial and supplemental responses to the defendant's motion, the government objects to the defendant's request for the partial release of the Disputed Funds and for a pretrial hearing on their traceability to the charged offenses. The government's opposition rests principally on the following grounds: (1) the defendant's right to challenge the forfeitability of the disputed assets is limited to the post-trial procedures provided by Federal Rule of Criminal Procedure 32.2, Gov.'t Opp'n Def.'s Mot. Vacate Seizure Warr. ("Gov't Opp'n") at6-9, ECF No. 194; (2) the defendant has failed to demonstrate that a pretrial hearing is required under the Due Process framework outlined in Mathews v. Eldridge, 424 U.S. 319 (1976), id. at 9-16; and (3) the defendant has failed to make a threshold showing that he requires the Disputed Funds to pay for ordinary and necessary living expenses, id. at 17-20. These arguments are addressed seriatim below, following review of the legal principles applicable to pretrial seizure of property pending final disposition of criminal charges.
A. LEGAL FRAMEWORK APPLICABLE TO PRETRIAL SEIZURE OF POTENTIALLY FORFEITABLE PROPERTY
The Supreme Court has long recognized the "strong governmental interest in obtaining full recovery of all forfeitable assets." Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 631 (1989). Forfeiture serves important punitive and deterrence functions, and forfeited property often is put to productive use in assisting crime victims and improving communities damaged by ...