Opinion ID: 2982493
Heading Depth: 1
Heading Rank: 3

Heading: Coffman’s Sentence

Text: Coffman argues that the district court erred in sentencing him to 300 months in prison. We review for abuse of discretion both the procedural and substantive reasonableness of the district court’s sentencing decision. See United States v. Cunningham, 669 F.3d 723, 728 (6th Cir. 2012). Coffman challenges first the district court’s failure to consider “the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct,” as required by 18 U.S.C. § 3553(a)(6). Coffman did not raise this objection during sentencing. When a defendant fails to raise an objection to the sentence after an invitation from the district court to do so, we review the sentence, including the sentencing procedures used by the district court, for plain error. United States v. Vonner, 516 F.3d 382, 385-86 (6th Cir. 2008) (en banc); see also United States v. Simmons, 587 F.3d 348, 360 (6th Cir. 2009). “If the record demonstrates that the sentencing court addressed the relevant factors in reaching its conclusion, the court need not explicitly consider each of the § 3553(a) factors or engage in a rote listing or some other ritualistic incantation of the factors.” United States v. Kirchhoj 505 F.3d 409, 413 (6th Cir. 2007); see also United States v. Houston, 529 F.3d 743, 751 (6th Cir. 2008). The record reflects that the district court considered the relevant sentencing factors in sentencing Coffman. We find no plain error in this regard. Coffman then argues that his sentence was substantively unreasonable because it was disproportionate when compared to sentences imposed in similar cases. But 18 U.S.C. 27 Nos. 12-5574/5611.6090, United States v. Coffrnan, et al. § 3553(a)(6) concerns “national disparities,” and “the Guidelines themselves represent the best indication of national sentencing practices.” Houston, 529 F.3d at 752. After considering the guidelines range of 324 to 405 months, the district court varied below the range and sentenced Coffman to imprisonment for 300 months. “{S]imple logic compels the conclusion” that a defendant has a “demanding” task to persuade this court that a sentence below the presumptively-reasonable guidelines range is “unreasonably long.” United States v. Curry, 536 F.3d 571, 573 (6th Cir. 2008). The extensive fraudulent conduct in this case, the need for general deterrence of such white-collar fraud, and the significant financial impact on the victims necessitate a long period of confinement. The 300-month sentence of incarceration imposed is not substantively unreasonable. J. The Preliminary Forfeiture Order Coffman next argues that the Government did not prove, by a preponderance of the evidence, that assets included in the Preliminary Order of Forfeiture bore a nexus to the crimes committed by Coffman. We review a district court’s factual findings in criminal forfeiture proceedings for clear error and the court’s legal conclusions regarding forfeiture de novo. Warshak, 631 F.3d at 331. The indictment contained a forfeiture count based on Coffman’ s mail fraud, wire fraud, and money laundering offenses. Coffman waived his right to a jury determination of the forfeiture issues. See Fed. R. Crim. P. 32.2(b)(5)(A) (providing that party may request “jury be retained to determine the forfeitability of specific property if it returns a guilty verdict”). The district court forfeited all thirteen financial accounts listed in the indictment, the South Carolina condominium, and the yacht, as being involved in money laundering. See United States v. Coffman, 859 F. Supp. 28 Nos. 12-5574/5611.6090, United States v. Coffman, et al. 2d 871 (E.D. Ky. 2012). Rejecting Coffman’s claim that non-investor funds were not forfeitable, the court explained that Coffman used the forfeited property to engage in money laundering and that he commingled investor funds with non-investor funds for the purpose of concealing and disguising the nature, location, source, ownership, and control of the fraud proceeds. Coffman, 859 F. Supp. 2d at 877-8 1. We find no error in the district court’s forfeiture order. Under the forfeiture statute, “property” that is “involved in” an offense “or any property traceable to such property” is forfeitable. 18 U.S.C. § 982(a)(1). “Property under the statute includes the money or other property being laundered (the corpus), any commissions or fees paid to the launderer, and any property used to facilitate the laundering offense.” United States v. Puche, 350 F.3d 1137, 1153 (11th Cir. 2003) (internal citations and quotation marks omitted). “Facilitation occurs when the property makes the prohibited conduct less difficult or more or less free from obstruction or hindrance.” Id. Commingling of fraud proceeds with untainted money as part of concealment money laundering under 18 U. S .C. § 195 6(a)( 1 )(B)(i) permits the forfeiting of the untainted money in certain circumstances. Puche, 350 F.3d at 1153. “Forfeiture of commingled funds . . . is proper when the government demonstrates that the defendant pooled the funds to facilitate or disguise his illegal scheme.” Id. Commingling “is enough to expose the legitimate funds to forfeiture, if the commingling was done for the purpose of concealing the nature or source of the tainted funds (that is, if the commingling was done to facilitate money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i).” United States v. McGauley, 279 F.3d 62, 76 (1st Cir. 2002). 29 Nos. 12-5574/5611.6090, United States v. Coffman, et al. The Government provided extensive bank records as well as charts outlining the path of monies through all of the bank accounts, which is sufficient to support a finding that Coffman commingled tainted and untainted funds for the purpose of concealment. “When a sequence of transactions is sufficiently complex, a reasonable juror may infer that the transactions were made for the purpose of concealment.” Warshak, 631 F.3d at 321 (internal citations and quotation marks omitted). The evidence relative to each account as well as to the condominium and the yacht demonstrates that Coffman commingled tainted and untainted funds to engage in concealment money laundering. The context of the money transfers also reveals Coffman’s intent to conceal. Coffman was aware that Mid-America investors were receiving only small checks from Mid-America; it was he who prepared the investors’ tax forms showing the amounts of their losses. After transferring money to his wife and her companies, Coffman moved Global’s office to the condominium and signed several of the purchase documents for the yacht. This context supports the conclusion that Coffman was commingling tainted and untainted funds for the purpose of concealing the nature and source of the tainted funds. Coffman’s argument that third party control of the bank accounts shields the accounts from forfeiture cannot succeed here, where the third party controlling the accounts was his wife. The only issue is whether the money laundering conduct “had a link to the assets listed in the indictment.” Warshak, 631 F.3d at 331. Clearly it did. Coffman orchestrated the transactions and continued to control the money after it was no longer in his name. For example, disguising his continuing control of the funds by transferring money to his wife and her companies, he then moved Global’s office to the condominium and signed several of the purchase documents for the yacht. 30 Nos. 12-5574/5611.6090, United States v. Coffrnan, et al. The evidence as a whole was sufficient to prove that he commingled funds with fraud proceeds and made transactions to disguise “the nature, location, source, ownership and control of the proceeds of his fraud.” Coffman, 859 F. Supp. 2d at 879. K. Substitute Assets and the Preliminary Forfeiture Order Coffman contends that the district court erred in amending the preliminary order of forfeiture under 21 U.S.C. § 853(p) to include property that Coffman claims belongs solely to Megan. Because the district court’s application of 21 U.S.C. § 853(p) is a question of law, we review this issue de novo. See United States v, Parrett, 530 F.3d 422, 429 (6th Cir. 2008). A brief background of the statutory scheme for forfeitures is helpful to resolving this issue. When imposing a sentence on a defendant convicted of money laundering or other specified offenses in 18 U.S.C. § 982(a)(1), the district court “shall order that the [defendant] forfeit to the government any property, real or personal, involved in such offense, or any property traceable to such property.” 18 U.S.C. § 982(a)1). Further, 18 U.S.C. § 982(b)(1) makes these forfeitures subject to the provisions of2l U.S.C. § 853, pursuant to which the government may obtain property used in or derived from a defendant’s criminal activity. To prevent a defendant from disposing of this tainted property, 21 U.S.C. § 853(c) makes clear that the government’s interest in such property vests “upon the commission of the act giving rise to [its] forfeiture.” Called the “relation back” doctrine, 21 U.S.C. § 853(c) permits the government to recover tainted assets no longer owned by the defendant. See United States v. O’Dell, 247 F.3d 655, 685 (6th Cir. 2001). Where because of the defendant’s actions, the government is unable to locate tainted property subject to criminal forfeiture, it may obtain “substitute property” to satisfy the amount the 31 Nos. 12-5574/5611.6090, United States v. Coffman, et al. defendant must forfeit as part of his sentence. 21 U.S.C. § 853(p). This provision permits the government to obtain “any other property of the defendant.” 21 U.S.C. § 853(p)(2). The government’s interest in substitute property—unlike its interest in tainted property—does not arise until “(1) after the defendant’s conviction and (2) the court determines the [tainted] property is out of the government’s reach for a reason enumerated in [the statute].” United States v. Erpenbeck, 682 F.3d 472, 478 (6th Cir. 2012). Thus we have held that the relation back doctrine “extends only to tainted property.” Id. at 477. In the instant case, the district court ordered Bryan Coffman to forfeit $33,000,000 as a money judgment. Arguing that it could not locate assets to satisfy the full money judgment, the Government filed a motion to amend the preliminary order of forfeiture to include additional automobiles and real property as substitute assets under 21 U.S.C. § 853(p). Among the additional assets the Government sought were five pieces of real property that Coffman had given to his wife in 2007. Coffman objected to the Government’s motion and argued that, because he did not own those properties, they could not be “property of the defendant” under 21 U.S.C. § 853(p) and were not subject to forfeiture as substitute assets. And because the Government’s interest in substitute assets did not relate back to the time of the criminal activity, Coffman claimed, the Government could not forfeit the property Coffman had transferred to his wife in 2007. The district court granted the Govermnent’s motion to amend and amended the preliminary order of forfeiture to include the five additional properties. It found that Coffman’ s argument was based solely on a third party’s interest in the property; that the argument must be raised at an ancillary hearing pursuant to 21 U.S.C. § 853(n); and that only the third party, namely Megan, 32 Nos. 12-5574/5611.6090, Un ited States v. Coffrnan, et al. could raise the argument. The district court held that, “the government may still be entitled to forfeit [Megan’s] properties as substitute assets if [it] prove[s] at the ancillary hearing that the transfers [to her] were fraudulent transfers under K.R.S. § 378.010.” Coffman now argues that, because the Government did not prove that the properties in question were his, the properties could not be “property of the defendant” under 21 U.S.C. § 853(p) and were not subject to forfeiture as substitute assets. This claim fails for several reasons. First, Coffman cannot assert a third party’s interest in substitute property in a direct challenge to a preliminary forfeiture order. “The forfeiture statute makes it clear that an ancillary proceeding is the sole avenue for a third party to assert an interest in forfeitable property.” Erpenbeck, 682 F.3d at 480. In Erpenbeck, we rejected the argument that a party to litigation may challenge a forfeiture order by asserting a third party’s interest in property to prove that it is not “property of the defendant.” Id. The court found that such an argument was “nothing more than an assertion that [the party] has a superior interest in [the property]—exactly the kind of argument that a third-party must make in an ancillary proceeding under § 853(n).” Id. Second, in the district court, the Government argued that Coffman maintained an interest in the properties—and hence they were “property of the defendant” under 21 U.S.C. § 853(p)—because the quit claim deeds executed in late 2007 to his wife were mere fraudulent conveyances aimed at avoiding creditors. The district court stated that it would hold an ancillary hearing on the issue of Megan Coffman’s claim to the properties as well as the issue of whether the properties were fraudulently conveyed. Coffman has not cited a single case to support the assertion that courts may not void fraudulent transfers as part of ancillary forfeiture proceedings. Further, if Coffman 33 Nos. 12-5574/5611.6090, United States v. Coffman, et al. had an interest in the properties, which he denies, then the Government has acquired it. If he had no interest in the properties, then the Government has acquired nothing from him. See 0 ‘Dell, 247 F.3d at 680. Finally, the district court acted pursuant to Rule 32.2 of the Federal Rules of Criminal Procedure. Rule 32.2 contemplates that a district court will issue a preliminary order of forfeiture and then hold any ancillary proceedings necessary to determine third party rights associated with the potentially forfeited properties: (2) Preliminary Order (A) Contents of a Specific Order. If the court finds that property is subject to forfeiture, it must promptly enter a preliminary order of forfeiture setting forth the amount of any money judgment, directing the forfeiture of specific property, and directing the forfeiture of any substitute property if the government has met the statutory criteria. The court must enter the order without regard to any third party’s interest in the property. Determining whether a third party has such an interest must be deferred until any third party files a claim in an ancillary proceeding under Rule 32.2(c). Fed. R. Crim. P. 32.2(b)(2)(A). The court then issues a final order of forfeiture based on findings from the ancillary proceeding: (2) Entering a Final Order. When the ancillary proceeding ends, the court must enter a final order of forfeiture by amending the preliminary order as necessary to account for any third-party rights. If no third party files a timely petition, the preliminary order becomes the final order of forfeiture if the court finds that the defendant (or any combination of defendants convicted in the case) had an interest in the property that is forfeitable under the applicable statute. Fed. R. Crim. P. 32.2(c)(2). The district court followed these procedures and did not err in doing so. Coffman complains that the ancillary proceeding prolongs the forfeiture process. As the Supreme Court noted, however, “[wjhatever the merits of this argument as a matter of policy, 34 Nos. 12-5574/5611.6090, United States v. Coffman, et al. Congress has determined that § 853(n). . . provides the means by which third-party rights must be vindicated.” Libretti v. United States, 516 U.s. 29, 44 (1995). L. The Taint Team Procedure Milby contends that the Government’s “taint team” procedure violated his due process rights. But Milby agreed to this document review process and thus has invited this error, if error there was. We therefore review this claim under the invited error doctrine, according to which, “when a party has himself provoked the court to commit an error, that party may not complain of the error on appeal unless that error would result in manifest injustice.” United States v. Demmier, 655 F.3d 451,458 (6thCir. 2011). In late 2008, federal agents seized documents from Coffman’s law office and from the South Carolina condominium while executing search warrants. A team of Assistant United States Attorneys who were not part of the prosecution team reviewed these documents to determine whether they were encompassed by attorney-client privilege. The team then classified each document as privileged, possibly privileged, and not privileged. This “taint team” did not share documents classified as privileged and possibly privileged with those charged with prosecuting Coffman and Milby. The district court conducted four hearings to consider Milby’s privilege claims relating to the items that the taint team had determined were possibly privileged. The district court made extensive findings regarding the documents identified by the taint team as potentially confidential, finding that most of them were either not privileged or were subject to the crime-fraud exception. Milby objects to the taint-team procedure employed by the Government, arguing that the district court erred by not holding the Government to more stringent standards in evidentiary 35 Nos. 12-5574/5611.6090, United States v. Coffman, et al. hearings. See In re Grand Jury Subpoenas, 454 F.3d 511, 517 (6th Cir. 2006). In particular, he maintains that the district court should have required the Government to shoulder the “heavy burden of proving that all of the evidence it propose[d] to use was derived from legitimate independent sources.” Kastigar v. United States, 406 U.S. 441, 461-62 (1972). The district court’s failure to do so, Milby complains, is contrary to Sixth Circuit precedent and resulted in a violation of his due process rights. Milby cannot show any manifest injustice in the district court’s conducting of the discovery process. We have said that taint teams are “used primarily in limited, exigent circumstances in which government officials have already obtained the physical control of potentially-privileged documents through the exercise of a search warrant.” In re Grand Jury Subpoenas, 454 F.3d at 522. “In such cases, the potentially-privileged documents are already in the government’s possession, and so the use of the taint team to sift the wheat from the chaff constitutes an action respectful of, rather than injurious to, the protection of privilege.” Id. at 522-23. Moreover, “because the documents were not the product of compelled testimony, a full Kastigar hearing was not required.” Warshak, 631 F.3d at 294. Such were the circumstances in the case at hand. Nor did the district court shift the burden of proof to the defense or apply the crime-fraud exception generally, as Milby argues. The Government provided evidence that supported a prima facie showing that a crime or fraud sufficiently serious to defeat Milby’s claims of privilege had occurred. See United States v. Collis, 128 F.3d 313, 321 (6th Cir. 1997). The court explained the relationship between the communication and the fraud as to each specific document. Finally, Milby cannot prevail in this claim because he cannot show prejudice. A defendant must demonstrate that the Government made “direct use of the privileged communications, either at 36 Nos. 12-5574/5611.6090, United States v. Coffinan, et al. trial or before the grand jury,” to show prejudice. Warshak, 631 F.3d at 294-95; see also United States v. White, 970 F.2d 328, 336 (7th Cir. 1992). “The attorney-client privilege is a testimonial privilege. Consequently, so long as no evidence stemming from the breach of the privilege is introduced at trial, no prejudice results.” White, 870 F.3d at 336. Milby has failed in precisely this way. The district court found that almost all of the documents were either not privileged or were subject to the crime-fraud exception. Milby has not pointed to a single document obtained in alleged violation of the attorney-client privilege that the Government introduced at trial. Thus his argument fails. M. Closing Arguments Defendants argue that they were denied their due process rights to a fair trial as a result of prosecutorial misconduct during closing arguments. Specifically, defendants argue that the prosecutor’s closing argument improperly shifted the burden of proof to defendants and was calculated to inflame passion and prejudice in the jury. Allegations of prosecutorial misconduct contain mixed questions of law and fact that we usually review de novo. United States v. Green, 305 F.3d 422, 429 (6th Cir. 2002). We use a two-step inquiry to examine claims of prosecutorial misconduct. United States v. Francis, 170 F.3d 546, 549 (6th Cir. 1999). First, we determine whether statements by the prosecutor were improper. Id. If they were, we determine whether the statements were so “flagrant” as to warrant reversal. Id. We consider four factors in determining whether statements were flagrant: (1) whether they tended to mislead the jury or prejudice the defendant; (2) whether the remarks were isolated or extensive; (3) whether the remarks were accidentally or deliberately made; and (4) the overall strength of the evidence against the defendant. Id. at 549-5 0. It is not 37 Nos. 12-5574/5611.6090, United States v. Coffinan, et al. enough that the prosecutor’s remarks were improper; they must have “so infected the trial with unfairness as to make the resulting conviction a denial of due process.” Darden v. Wainwright, 477 U.S. 168, 181 (1986) (quoting Donnelly v. DeChristoforo, 416 U.S. 637, 643 (1974)). Defendants focus on two statements by the prosecutor during closing argument. First, defendants claim that the prosecutor made an inappropriate statement in an exchange over the idea of good faith. Counsel for Coffman had said in his closing: “And if I have a belief that what my client is doing is legal, and how I’ve set it up is legal, and I’ve got a good-faith argument for that belief, I can argue that as long as I want. Lawyers are permitted to make losing arguments.” In his rebuttal closing, the prosecutor responded: Mr. Romines [Coffman’s counsel] says that good faith is a complete defense. And it is, if there is evidence of good faith. But was there any evidence introduced of good faith in this in this case? Was there any evidence introduced of is there — — any evidence of any mistaken conduct or intent? Coffman’ s attorney objected, and the court directed the jury to ignore the statement. Coffman’ s attorney requested an admonition, and the court told the jury: “Members of the jury, the burden of proving the good faith does not rest with the defendant because the defendant does not have any obligation to prove anything in this case. It’s the government’s burden to prove to you beyond a reasonable doubt that the defendant acted with an intent to defraud.” Defendants argue that this exchange was prejudicial because it improperly shifted the burden of proof to defendants and because the prosecutor had conveyed “by virtue of his experience, knowledge and intellect” that the jury must convict. United States v. Bess, 593 F.2d 749, 755 (6th Cir. 1979). Defendants’ arguments are not persuasive for several reasons. Even if the statement was improper, it was not flagrant: it was isolated and ultimately did not prejudice the defendants 38 Nos. 12-5574/5611.6090, United States v. Coffman, etal. because the evidence against the defendants was strong. See Francis, 170 F.3d at 549. Further, the district court immediately provided a curative instruction, telling the jury to disregard the statement. See United States v. Johnson, 581 F.3d 320, 330 (6th Cir. 2009). The court’s instructions to the jury at the beginning of the trial and the final charge following closing arguments also protected defendants from prejudice. See United States v. White, 563 F.3d 184, 194-95 (6th Cir. 2009). Thus the comment by the prosecutor was not flagrant. Defendants also complain that a second portion of the prosecutor’s closing argument, dealing with the jury, was inappropriate. In his rebuttal closing, the prosecutor stated: You know, how many times in life have you heard someone say to you on the street, “You know, can you believe what they did, or they’re doing, and why doesn’t someone do something about it?” And I always ask, “Well, who is the ‘they?’ Who is the ‘somebody’ who is going to do something about it?” This time, Milby’s attorney objected, and the court overruled the objection and said, “Please proceed.” The prosecutor then concluded his rebuttal argument: Thank you. As I said, that question raises the subsequent question of who is the somebody who is going to do something about it? When this first started, it was the SEC and various regulatory agencies, and the Postal Inspection Service, and then my office. But we’re done. When I sit down, we are finished. Today, somebody is you. If you don’t do it, it doesn’t get done. I ask you to do your job. Thank you. Defendants argue that this statement was improper because comments appealing to the national or local community interests ofjurors are impermissible if they are “calculated to inflame passion and prejudice.” United States v. Solivan, 937 F.2d 1146, 1152 (6th Cir. 1991). Even if the statement was improper, it must have been flagrant. Wainwright, 477 U.S. at 181. Applying the factors from Francis, we hold that the statement was not flagrant. It did not mislead the jury or prejudice defendants, but pointed out the role of the jury in the instant case. It was isolated, 39 Nos. 12-5574/5611.6090, United States v. Coffman, et al. coming after a lengthy trial and consisting of only a few sentences within nearly fifty pages of the prosecutor’s closing argument. See Cockream v. Jones, 382 F. App’x 479, 486 (6th Cir. 2010). Finally, while the statement was deliberately made, it followed extensive evidence of defendants’ guilt adduced at a fifteen-day trial. Even if improper, the statement was not flagrant. N. Cumulative Error Defendants argue that there was cumulative error because “the combined effect of individually harmless errors was so prejudicial as to render [their] trial fundamentally unfair.” United States v. Trujillo, 376 F.3d 593, 614 (6th Cir. 2004). Defendants have failed to persuade us of the merit of any of their claims of error. The record does not demonstrate that defendants were denied a fundamentally fair trial. Thus this argument is meritless.