MEMORANDUM OF FINDINGS OF FACT AND STATEMENT OF
REASONS IN SUPPORT OF ORDER OF REVOCATION AND
DETENTION
DEBORAH A. ROBINSON UNITED STATES MAGISTRATE JUDGE.
I.
INTRODUCTION
Defendant
is charged by Complaint with one count of Wire Fraud, in
violation of 18 U.S.C. § 1343, and one count of
Aggravated Identity Theft, in violation of 18 U.S.C. §
1028. After the Court ordered Defendant's release subject
to conditions on October 28, 2019, the Government, on
November 21, 2019, moved to revoke Defendant's release
conditions. First, the Government asserted that Defendant
committed “Wire Fraud, in violation of 18 U.S.C. §
1343, Bank Fraud, in violation of 18 U.S.C. § 1344, and
First Degree Fraud, in violation of 22 D.C. Code §§
3221(a), 3222(a)(1).” Government's Motion to Revoke
Release (“Government's Motion”) (ECF No. 10)
at 6. Second, the Government asserted that Defendant violated
the condition of release which prohibits Defendant from
conducting “any transaction over $1, 000[, ]”
except for child support and rent, without the prior approval
by Pretrial Services. Order Setting Conditions of Release
(ECF No. 9) at 2. During a hearing on December 9,
2019, the Government declined to argue that Defendant
violated federal and state criminal fraud laws. During the
same hearing and during another hearing on December 11, 2019,
the Government did, however, assert another violation of law
to support its motion for revocation. See Notice of
Filing (ECF No. 19). The Government introduced evidence of an
executed search warrant which revealed that a package
containing controlled substances was addressed to Defendant
at her home address. Defendant disputed the Government's
characterization of the financial transactions and the
information revealed through the executed search warrant.
The
undersigned conducted hearings on the Government's Motion
on December 9, 2019 and December 11, 2019. Upon consideration
of the evidence offered by the parties, the proffers and
arguments of counsel, and the entire record herein, the
undersigned ordered Defendant held without bond pursuant to
18 U.S.C. § 3148(b)(1)(A) and 18 U.S.C. §
3148(b)(1)(B). The findings of fact and statement of reasons
in support of the Order of Revocation and Detention follow.
II.
THE BAIL REFORM ACT
The
Bail Reform Act of 1984, 18 U.S.C. § 3141, et
seq., provides, in pertinent part, that if a judicial
officer “shall order an order of revocation and
detention if, after a hearing, the judicial officer . . .
finds that there is . . . probable cause to believe that the
person has committed a Federal, State, or local crime while
on release.” 18 U.S.C. §§ 3148(b), (b)(1)(A).
Additionally, a judicial officer “shall order an order
of revocation and detention if, after a hearing, the judicial
officer . . . finds that there is . . . clear and convincing
evidence that the person has violated any other condition of
release.” Id. §§ 3148(b), (b)(1)(B).
If a
judicial officer finds that the Government meets its burden
on either of these grounds, the judicial officer shall enter
an order of revocation only if “based on the factors
set forth in section 3142(g) of this title, there is no
condition or combination of conditions of release that will
assure that the person will not flee or pose a danger to the
safety of any other person or the community” or
“the person is unlikely to abide by any condition or
combination of conditions of release.” Id.
§§ 3148(b)(1)(A)-(B). If there is probable cause to
believe that the person on release committed a federal, state
or local felony, “a rebuttable presumption arises that
no condition or combination of conditions will assure that
the person will not pose a danger to the safety of any other
person or the community.” Id. §
3148(b)(1)(B).
III.
FINDINGS OF FACT
The
Government offered the testimony of FBI Special Agent Joshua
A. Huckel, and the exhibits attached to the Government's
filings associated with the Motion to Revoke Pretrial
Conditions. (ECF Nos. 10, 15, 16, 19). Defendant offered as
evidence two exhibits which the court received during the
December 9, 2019 hearing. (ECF No. 20). Pretrial Services
also filed a Status Report. (ECF No. 18). Upon consideration
of all of the evidence, the Court now makes the following
factual findings to supplement the ones set forth on the
record on December 11, 2019.
A.
Financial Transactions Over $1, 000
Defendant
maintains three accounts at issue here: a Charles Schwab
brokerage account, a Paxos Trust Company LLC account, and a
Paxful account. Paxos offers cryptocurrency products and
services. Paxful is a peer-to-peer market for cryptocurrency.
On
October 25, 2019, Defendant transferred $14, 000 and $16, 000
from her Charles Schwab account to her Paxos account.
On
October 30, 2019, a person by the initials J.S. in Myrtle
Beach, South Carolina, who suffers from Parkinson's
Disease, gave computer access to someone J.S. knew as
“Jack Wilson” and an unnamed associate of
“Jack Wilson.” These men contacted J.S. on
multiple occasions about what they called “software
updates” to a program on J.S.'s computer which
provides remote access, “Team Viewer.” After
several calls, J.S., on October 30, 2019, acquiesced to their
request for computer access on October 30, 2019. A day or two
later, several transfers from J.S.'s account took place,
one of which was a $29, 000 transfer from J.S.'s Charles
Schwab Inherited IRA account and Defendant's Charles
Schwab brokerage account. Another transfer reflected a $5000
transfer to an account maintained by “Rockwell Capital
Management” at the State Bank of Southern Utah in Las
Vegas, Nevada. Another transfer was attempted to an account
maintained by Ran Longjun at the Bank of China in Hong Kong,
but that transfer was not fulfilled. In one call with Agent
Huckel, J.S. explained that J.S. made the wire transfers. In
another call with Agent Huckel, J.S. explained that
“Jack Wilson” and the unnamed associate hacked
into J.S.'s computer.
On
October 31, 2019, Defendant, through her Paxful account name,
“freedc, ” made three transfers of Bitcoin to a
user with the username “RedWomen.” In total,
these three transfers included bitcoin valued at $29, 000.
On
November 7, 2019, Charles Schwab reversed J.S.'s wire
transfer to Defendant's Charles Schwab brokerage account.
Defendant attempted to dispute the reversal with Schwab,
characterizing the transfer as related to an exchange for
“property” in a chat session with a Schwab
employee. Defendant's efforts were unsuccessful.
Defendant
urged this Court to find that these transactions were merely
the consummation of an agreement reached on October 25, 2019,
which predated the Court's imposition of pretrial release
conditions. At a hearing, Defendant, through her counsel,
conceded that there was no direct evidence of such an
agreement. Defendant maintained, however, that Paxful chat
logs and the sequence of transactions leads to an inference
that Defendant innocently believed that
“RedWomen” was either J.S. or a broker to J.S.,
and that Defendant and “RedWomen” essentially
agreed to a currency conversion between bitcoin and U.S.
dollars. As a result of that agreement, Defendant maintains
that she transferred funds to Paxos on October 25, 2019 and
received payment through the wire transfer from J.S. without
knowing the circumstances surrounding the transfer. Chat
transcripts with “RedWomen” reveal that Defendant
believed “RedWomen” was acting on behalf of J.S.
The
Court finds that Defendant offered no evidence of an
agreement predating October 28, 2019. Defendant, through her
counsel, also conceded that Defendant did not seek prior
approval from Pretrial Services. The Court therefore finds
that there is clear and convincing evidence that
Defendant's ...