Court Opinion

ID: 6350904
Source: CourtListenerOpinion
Date Created: 2022-06-17 18:00:39.266381+00
Date Added: 2024-06-11T09:15:43.345269
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 21-2551
UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,
                                v.

JANET GUERRERO,
                                                          Defendant,
APPEAL OF: DANILO TINIMBANG
                    ____________________

        Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
       No. 1:14-cr-00732 — Rebecca R. Pallmeyer, Chief Judge.
                    ____________________

      ARGUED APRIL 14, 2022 — DECIDED JUNE 17, 2022
                ____________________

   Before SYKES, Chief Judge, and HAMILTON and SCUDDER,
Circuit Judges.
   SCUDDER, Circuit Judge. Danilo Tinimbang and his then-
wife Josephine started Donnarich Home Health Care, Inc. in
Lincolnwood, Illinois. His ex-wife allegedly engaged in
healthcare fraud and money laundering conspiracies involv-
ing Donnarich. After Janet Guerrero, one of the alleged co-
conspirators, pled guilty to federal charges, the court ordered
2                                                  No. 21-2551

the forfeiture of assets involved with or traceable to the fraud
scheme. Tinimbang made a claim to these forfeited assets
based on his substantial initial investment in Donnarich. But
after careful review the district court entered summary judg-
ment for the government, concluding that Tinimbang had not
carried his burden to show a vested or superior interest in the
forfeited assets at the time of the underlying criminal acts. We
aﬃrm.
                               I
                               A
    Tinimbang founded Donnarich in early 2005 with his
then-wife Josephine and their three children, Don Michael,
Richard, and Donna. He invested $811,400, became a 50%
shareholder, and served as the company’s president. At some
point in 2006 or 2007, Josephine and others forced him out of
his management role, but he maintained his equity position.
    In 2005 Josephine and Richard Tinimbang incorporated
Josdan Home Health Care, Inc., another home health care
company. Thirteen years later, in 2018, Josephine and Richard
incorporated a third home health care business, Patient Home
Services of Illinois, Inc. At least some of Josdan and Patient
Home Services’s initial funding came from Donnarich’s as-
sets. These developments later prompted Danilo Tinimbang
to assert that neither Josephine nor Richard compensated him
for the asset transfers from Donnarich to the other home
health care companies or for removing him as Donnarich’s
president.
                               B
    In 2016 a federal grand jury in the Northern District of Il-
linois charged Josephine Tinimbang and others—including
No. 21-2551                                                   3

Janet Guerrero, an employee of both Donnarich and Josdan—
with conspiracy to commit health care fraud (18 U.S.C. § 1349)
and conspiracy to launder the proceeds of health care fraud
and unlawful payments for patient referrals (18 U.S.C.
§ 1956(h)). The indictment alleged that between 2008 and 2014
the conspirators used Donnarich and Josdan to bill Medicare
for services rendered to purportedly homebound patients,
knowing that these patients neither received nor were eligible
for such services. The conspirators sought to conceal the pro-
ceeds of the fraud between 2008 and 2013, the indictment con-
tinued, by creating shell companies and depositing checks in
accounts belonging to entities other than those of the intended
recipients. The indictment included a notice of the govern-
ment’s intent to seek the forfeiture of assets involved in or
traceable to the conspiracies.
   Josephine Tinimbang sought to avoid prosecution by ﬂee-
ing to the Philippines. Guerrero, for her part, pled guilty to
the money laundering conspiracy. Pursuant to a plea agree-
ment, Guerrero agreed to forfeit the following assets:
   •   $1,572,906.88 seized on or about March 5, 2014
       from an account held in the name of First USA Fi-
       nance and Investment at Pershing Advisor Solu-
       tions LLC;
   •   $1,438,050 seized on or about April 24, 2014 result-
       ing from the sale of Facebook shares held in a
       Computershare account in the name of First USA
       Finance and Investment;
   •   Real property in Lincolnwood, Illinois; and
   •   $425,967.24 in proceeds from the sale of other real
       property in Lincolnwood.
4                                                  No. 21-2551

    At Guerrero’s sentencing in January 2018, the district court
entered a preliminary order of forfeiture or POF, ﬁnding that
these four assets were “involved in” or “traceable to” prop-
erty involved in Guerrero’s oﬀense conduct.
                               C
    Danilo Tinimbang asserted a timely claim to the POF as-
sets in February 2018. He did so by instituting ancillary pro-
ceedings under Federal Rule of Criminal Procedure 32.2(c),
contending that he had a legal interest in the POF assets based
on his initial investment in Donnarich, his removal as presi-
dent without compensation, and the allegedly improper
transfers from Donnarich to Josdan and Patient Home Ser-
vices, the two companies formed by his ex-wife Josephine and
their son Richard.
    Tinimbang did not accompany his claim with any ﬁnan-
cial tracing to determine whether the POF assets derived from
his initial investment in Donnarich. But the government did.
During its investigation, the government enlisted the help of
a Special Agent at the IRS who “reviewed the movement of
funds” between the co-conspirators. This analysis “demon-
strate[d] that Donnarich, Josdan, and their associated compa-
nies received millions of dollars from Medicare by enrolling
non-homebound patients.”
   The government’s analysis also revealed that Guerrero
and other conspirators “used shell and ‘pass-through’ compa-
nies closely associated with Josdan and Donnarich . . . to ob-
scure the purpose of certain transactions.” These shell compa-
nies engaged in several types of transactions—including pur-
chases of stock, real estate, and cashier’s checks—to launder
the ﬂow of the illicit Medicare proceeds.
No. 21-2551                                                   5

    With respect to the POF assets speciﬁcally identiﬁed in
Guerrero’s plea agreement, the government asserted that it
was able to trace the resources used to purchase the assets “to
funds that Medicare deposited into several individual and
corporate accounts, including accounts for which Guerrero
was an authorized signatory.” The tracing analysis likewise
revealed that the conspirators “engaged in several activities
to launder the funds relating to the POF assets.”
    All told, the government’s tracing analysis did not show
that any of Danilo Tinimbang’s initial investment in Don-
narich went towards the purchase the POF assets. It did show,
however, that $398,132 of the funds used to purchase the POF
assets came from “unspeciﬁed sources.” The analysis likewise
established that approximately 25% of the source of funds of
the POF assets was not directly traceable to the underlying
Medicare fraud. But the government’s analysis more gener-
ally showed that POF assets were all involved in the money
laundering scheme. For his part, Tinimbang admitted that “he
has no basis . . . to speciﬁcally dispute any particular portion
of the Government’s tracing.”
    Relying upon this record, the district court entered sum-
mary judgment for the government. The court recognized the
high burden Tinimbang bore in the ancillary proceedings—
proving by a preponderance that he held “a vested or supe-
rior interest in the POF assets at the time of the criminal acts
giving rise to forfeiture.” Tinimbang fell short of meeting this
burden, the court determined, because he identiﬁed no evi-
dence permitting a ﬁnding that any of his funds went toward
the purchase of any POF asset. From there the district court
applied the relation back doctrine—under which title and le-
gal right to forfeitable property “vests in the United States
6                                                   No. 21-2551

upon the commission of the act giving rise to forfeiture,” 21
U.S.C. § 853(c)—and concluded that title to the POF assets
vested in the United States upon the commission of the un-
derlying fraud and money laundering oﬀenses.
    The district court underscored that its conclusion did not
change even though certain assets could not be speciﬁcally
traced to the underlying fraud. The court instead determined
that “all of the funds used to purchase the POF assets were
involved in money laundering” and were thus properly for-
feitable. The court therefore entered summary judgment for
the government.
    Tinimbang now appeals.
                               II
                               A
      In sentencing somebody convicted of money laundering
under 18 U.S.C. § 1956, the district court “shall order that the
person forfeit to the United States any property, real or per-
sonal, involved in such oﬀense, or any property traceable to
such property.” 18 U.S.C. § 982(a)(1). The forfeiture, in turn,
is governed by 21 U.S.C. § 853(c), under which “[a]ll right, ti-
tle, and interest in property [subject to criminal forfeiture]
. . . vests in the United States upon the commission of the act
giving rise to forfeiture.” 18 U.S.C. § 982(b)(1). After Guerrero
pled guilty, the district court implemented these mandates by
“determin[ing] what property is subject to forfeiture” and
“promptly enter[ing] a preliminary order of forfeiture
. . . without regard to any third party’s interest in the prop-
erty.” Fed. R. Crim. P. 32.2(b)(1)(A), (b)(2)(A).
   In the ancillary proceedings challenging the forfeiture,
Tinimbang shouldered the burden of showing by a
No. 21-2551                                                       7

preponderance of the evidence that he, as a third party, “has
a legal right, title, or interest in the property” and that the for-
feiture was invalid because either “the right, title, or interest
was vested in the petitioner rather than the defendant or was
superior to any right, title, or interest of the defendant at the
time of the commission of the acts which gave rise to the forfei-
ture of the property.” 21 U.S.C. § 853(n)(6)(A) (emphasis
added). This burden is heavy “[b]ecause, by deﬁnition, the
‘proceeds of an oﬀense do not exist before the oﬀense is com-
mitted,’ and because ‘the government’s interest under the re-
lation-back doctrine immediately vests’ upon the commission
of that oﬀense, any proceeds that ensue from the criminal act
belong to the government from the moment that they come
into existence.” United States v. Watts, 786 F.3d 152, 166–67 (2d
Cir. 2015) (quoting United States v. Timley, 507 F.3d 1125, 1130
(8th Cir. 2007)); see also United States v. Grossman, 501 F.3d
846, 848 (7th Cir. 2007) (applying 21 U.S.C. § 853(n)(6) and re-
quiring a claimant to show “that its interest is superior to that
of the defendant because it arose before he committed the
criminal acts giving rise to the forfeiture”).
                                 B
    Tinimbang fell short of carrying this statutory burden. To
his credit, he candidly acknowledges that he has no basis to
dispute any speciﬁc component of the government’s tracing
analysis—a ﬁnancial assessment that traced the POF assets to
proceeds of the Medicare fraud and the money laundering
scheme and concluded that there was no “indication that any
money once belonging to [Tinimbang] . . . was used to pur-
chase any of these assets.” Tinimbang further admits an “ina-
bility to directly trace the original source of any particular
POF asset back to his original $811,400 contribution to
8                                                     No. 21-2551

Donnarich.” He thus cannot satisfy the burden Congress im-
posed on him in § 853(n)(6). See, e.g., United States v. Catala,
870 F.3d 6, 10 (1st Cir. 2017) (requiring an interest “in that spe-
ciﬁc property” subject to forfeiture “before the commission of
the crime that led to the forfeiture”) (emphasis in original).
    This relation-back rule operates with great force in cases
like this. Recognize the consequence: because the POF assets
had origins in the health care fraud and money laundering
conspiracies, title vested with the United States upon their
purchase. See 18 U.S.C. § 982(a)(1); 21 U.S.C. § 853(c).
    That the government’s tracing analysis showed that ap-
proximately 25% of the funds used to purchase the POF assets
were not traceable to the Medicare fraud does not change this
result. What the record does show—or so the district court
reasonably found—was that all funds used to purchase the
POF assets were involved in the money laundering conspir-
acy. Tinimbang cannot challenge this ﬁnding by the district
court in an ancillary proceeding, which by its terms “does not
involve relitigation of the forfeitability of the property; its
only purpose is to determine whether any third party has a
legal interest in the forfeited property.” Fed. R. Crim. P. 32.2
advisory committee’s note to 2000 adoption; see also United
States v. Fabian, 764 F.3d 636, 638 (6th Cir. 2014) (“By its plain
terms, therefore, § 853(n) does not permit ‘relitigation’ of the
district court’s antecedent determination that an item of prop-
erty is subject to forfeiture.”).
   Even if he could do so, Tinimbang’s claim would still fail
because “the commingling of crime proceeds with ‘clean’
money makes money laundering less diﬃcult and may even
be necessary to the successful completion of the oﬀense.”
United States v. Baker, 227 F.3d 955, 970 (7th Cir. 2000) (quoting
No. 21-2551                                                     9

United States v. Tencer, 107 F.3d 1120, 1134 (5th Cir. 1997)). The
clean funds, in short, are deemed “involved for purposes of
the forfeiture statute.” Id. (quoting Tencer, 107 F.3d at 1134)
(cleaned up). Here, it is undisputed that all the funds that
comprise or were used to purchase the POF assets were in-
volved in the money laundering. Title to the POF assets there-
fore vested in the United States upon their acquisition, which
means Tinimbang never held a legal interest in them. See
Watts, 786 F.3d at 166–67.
                                C
    Tinimbang begs to diﬀer by invoking general principles of
equity and fairness and arguing that the district court im-
posed an unreasonable burden by failing to see him as a vic-
tim of his wife’s fraud and, in turn, requiring him to trace his
clean funds to the forfeited assets. But this position is fore-
closed by the statutory scheme Congress prescribed, which
required Tinimbang to show a superior interest in the POF
assets to the government. See 21 U.S.C. § 853(n)(6)(A). The dis-
trict court applied this precise framework. At the very least,
and as recognized by the district court, “no reasonable jury
could ﬁnd that the portion of the POF assets [Tinimbang]
seeks is traceable to the wrongdoing he suﬀered” because he
provided no tracing analysis of his own.
    Our conclusion does not leave Danilo Tinimbang without
an avenue for recourse. All along he could have ﬁled a remis-
sion petition with the Attorney General, who Congress has
authorized to “grant petitions for mitigation or remission of
forfeiture . . . or take any other action to protect the rights of
innocent persons which is in the interest of justice.” 21 U.S.C.
§ 853(i)(1); see also 28 C.F.R. § 9.5(a)(1). He could have also
pursued a derivative action on behalf of Donnarich itself
10                                                  No. 21-2551

against his ex-wife and others in the company for their misuse
of corporate assets or conversion. We oﬀer no view on the ul-
timate merits of such actions or their availability at this date.
                        *       *      *
    Because Tinimbang has not shown he has a legal interest
in the forfeited assets, much less one that is superior to the
interest held by the government, we AFFIRM the district
court’s entry of summary judgment in the government’s fa-
vor.