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United States v. Swenson

United States District Court, Ninth Circuit

September 5, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
DOUGLAS SWENSON, MARK A. ELLISON, DAVID D. SWENSON, JEREMY S. SWENSON, Defendant.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

The Court has before it Defendant Douglas Swenson's Request for Hearing Under Federal Rule of Criminal Procedure 41(g) (Dkt. 106). The Court indicated in an earlier order that Doug Swenson's request for a hearing would be granted if he decided to proceed under Rule 41(g). The Court, however, has considered the issue further and now finds that Swenson must make a preliminary showing before the Court will grant his Rule 41(g) hearing request. Specifically, before Swenson's request for an evidentiary hearing is granted, Swenson must first (1) identify which seized accounts he seeks returned and make a preliminary showing that he is entitled to lawful possession of the identified accounts, and (2) make a preliminary showing that the accounts he seeks returned are not forfeitable. Factual allegations in Swenson's moving papers must be sufficiently definite, specific, detailed, and nonconjectural, to enable the court to conclude that a substantial claim on these issues is presented.

Defendant Swenson, however, need not make any showing that the seized funds are needed to retain counsel of his choice.

If the hearing request is granted, Swenson, as the moving party, will carry the burden of proof on the two issues specified above, i.e, (1) that he is entitled to lawful possession of those accounts he seeks returned, and (2) the accounts he seeks returned are not forfeitable. No other issues will be covered during the hearing.

BACKGROUND

Defendant Doug Swenson was indicted for conspiracy to commit securities, wire and mail fraud, and for interstate transportation of stolen property, money laundering conspiracy, and over eighty counts of securities, wire and bank fraud, and interstate transportation of stolen property. The Indictment (Dkt.1) included criminal forfeiture allegations naming six specific investment accounts at TD Ameritrade as being subject to forfeiture upon conviction.

One day prior to the grand jury's issuing the Indictment, on April 9, 2013, United States Chief Magistrate Judge Candy W. Dale issued a seizure warrant for the TD Ameritrade investment accounts, which included an account held in Doug Swenson's name, as well as other accounts associated with Swenson.

On May 17, 2013, the grand jury returned a Superseding Indictment (Dkt. 21 and 21-1), which included a money-laundering conspiracy count specifically naming the bank accounts through which the seized funds had passed and the TD Ameritrade accounts from which the funds were seized. The grand jury found probable cause for a money-laundering violation that involved the seized accounts, and also found probable cause for forfeiture of the seized accounts as property involved in the laundering violation. The seizure of the funds and their inclusion in the two indictments' forfeiture sections constituted commencement of federal criminal forfeiture proceedings as to the subject funds.

A few days later, on May 22, 2013, Doug Swenson filed a motion to dissolve the seizure warrant pursuant to United States v. Crozier, 777 F.2d 1376 (9th Cir. 1985), United States v. Roth, 912 F.2d 1131 (9th Cir. 1990), 21 U.S.C. § 853(f), and Federal Rule of Civil Procedure 65(B)(4) (Dkt. 23). He based his request to dissolve the seizure warrant on two grounds: (1) that Magistrate Judge Dale improperly issued the warrant without a finding under 21 U.S.C. § 853(f) that "the less drastic measure of a restraining order under Section 853(e) is insufficient to protect against dissipation of the assets" (Dkt. 23 at 1); and (2) that the government had failed to follow the procedures set out in the Crozier and Roth decisions, namely proceeding under Federal Rule of Civil Procedure 65 to hold a hearing. The other defendants joined the motion.

On July 1, 2013, the Court issued a Memorandum Decision and Order denying Defendants' request to dissolve the warrant (Dkt. 76). The Court held that the warrant did in fact contain the necessary language required under 853 U.S.C. § 853(f), and that the seizure warrant was properly issued by Judge Dale. Id. at 8-9. With respect to Defendants' argument that the Government failed to follow the procedures set out in Crozier and Roth, the Court concluded that the government's obtaining a seizure warrant in this case was supported by United States v. Unimex, 991 F.2d 546 (9th Cir. 1993). The Court further concluded that Defendants had failed to make a showing sufficient to trigger a probable cause hearing under Unimex. The Court, however, gave Defendants an opportunity to file "a properly supported motion for return of property, " stating that [i]f the Court finds the allegations contained in the supporting affidavits are sufficient, and factual issues are raised, the Court must and will schedule an evidentiary hearing." Order at 6, Dkt. 76.

On July 16, 2013, the Court enter an order (Dkt. 91) clarifying its July 1 decision. In this July 16 Order, the Court drew a distinction between a hearing contemplated under Unimex and a hearing under Rule 41(g), giving Defendants the option of requesting a probable cause hearing under Unimex or a Rule 41(g) hearing. If Defendants opted to proceed under Unimex, the government would carry the burden of proving probable cause at the hearing; however, to proceed under Unimex, Defendants would have to make a prima facia showing that they needed the seized funds to pay for retained counsel. On the other hand, if Defendants opted for a Rule 41(g) hearing, they would not need to make any showing that they needed the seized funds to pay for counsel before their hearing request was granted, but they would carry the burden of proof at the hearing.

On August 7, 2013, Defendant Doug Swenson filed a "Request for Hearing Under Federal Rule of Criminal Procedure 41(G)" (Dkt. 106), asking for a three-day hearing. Swenson stated in his hearing request that he "anticipates the necessity of a hearing of three days' length. He will call as witnesses Special Agent Keith Tippets, Justice Department attorney Mark Williams and Revenue Agent Rachel Martinen." Rule 41(g) Request for Hearing at 2, Dkt. 106. Swenson also stated that he anticipated calling additional witnesses, who would be identified as soon as practicable. Id.

With the Court's permission, the government filed a response to Swenson's hearing request. In its response, the government argues that Swenson should not be granted an evidentiary hearing without Swenson's making some ...


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