2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 1 of 7 Pg ID 16394 UNITED STATES OF AMERICA, UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION Plaintiff, CASE No. 10-cr-20403 v. HON. NANCY G. EDMUNDS D-1 KWAME M. KILPATRICK, Defendant. / GOVERNMENT S MEMORANDUM REGARDING FORFEITURE MONEY JUDGMENT AS TO DEFENDANT KWAME M. KILPATRICK I. BACKGROUND The Fourth Superseding Indictment ( Indictment ) in this case contains Criminal Forfeiture Allegations providing notice to defendant Kwame M. Kilpatrick ( Kilpatrick ) that upon conviction the United States would seek criminal forfeiture pursuant to 18 U.S.C. 1963, 18 U.S.C. 981 and 28 U.S.C. 2461(c), including a money judgment for the amount of proceeds obtained as a result of Kilpatrick s violations. Kilpatrick was convicted by a jury of RICO conspiracy, extortion and bribery, among other crimes. The government seeks a forfeiture money judgment against Kilpatrick in the amount of $4,584,423.00, which is the amount of proceeds this Court has determined was obtained as a result
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 2 of 7 Pg ID 16395 of Kilpatrick s violations of Counts 1 through 4, and 9. Kilpatrick will be jointly and severally liable with co-defendant Bobby Ferguson to pay the money judgment. II. FORFEITURE IS MANDATORY Forfeiture under the RICO statute is mandatory. United States v. Corrado, 227 F.3d 543, 552 (6th Cir. 2000). Pursuant to 18 U.S.C. 1963(a)(3), a defendant convicted under 18 U.S.C. 1962 shall forfeit to the United States any property constituting, or derived from, any proceeds obtained, directly or indirectly, from the racketeering activity. Kilpatrick s conviction on Count 1 subjects him to the forfeiture provisions set forth in 18 U.S.C. 1963(a)(3). Forfeiture is also mandatory upon conviction of interference with commerce by extortion, pursuant to 18 U.S.C. 981(a)(1)(C) and 28 U.S.C. 2461(c). As a result of Kilpatrick s convictions on Counts 2, 3, 4 and 9 (extortion), he must forfeit to the United States an amount which constitutes the amount of proceeds derived from his violations. 18 U.S.C. 981(a)(1)(C); 28 U.S.C. 2461(c). III. THE COURT DETERMINES THE AMOUNT TO BE FORFEITED Where the government seeks a forfeiture money judgment, the court must determine the amount of money that the defendant will be ordered to pay. Rule 32.2(b)(1)(A), Federal Rules of Criminal Procedure. In determining the amount of the money judgment, the Court need only make a reasonable estimate of the 2
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 3 of 7 Pg ID 16396 proceeds obtained as a result of a defendant s criminal activities. United States v. Basciano, 2007 WL 29439 at *3-4 (E.D.N.Y. 2007). When making forfeiture decisions, the Court s determination may be based on evidence already in the record or on evidence or information presented by the parties at a hearing, including hearsay evidence. Federal Rule of Criminal Procedure 32.2(b)(1)(B); United States v. Ivanchukov, 405 F.Supp.2d 708, 709 n.1 (E.D.Va. 2005) (because forfeiture is part of sentencing, reliable hearsay is admissible to establish the forfeitability of the property). Furthermore, because forfeiture is part of a sentence on a count of conviction, and not a substantive offense, the standard of proof regarding the forfeitability of property in a criminal case is preponderance of the evidence. United States v. Basciano, 2007 WL 29439 at *2. 4 IV. A MONEY JUDGMENT IN THE AMOUNT OF $4,584,423.00 SHOULD BE ORDERED. A defendant convicted under RICO of obtaining government contracts through extortion must forfeit the gross revenues received under the contracts without deduction for any costs incurred. United States v. Lyons, 870 F.Supp.2d 281, 290-91 (D. Mass. 2012)(gross proceeds of RICO enterprises, not merely net 4 To meet its burden in the instant case with regard to the amount of the money judgment, the government relies on (1) Kilpatrick s convictions, (2) the facts presented at trial, (3) information contained in the Presentence Investigation Report for Kilpatrick, and (4) information provided in the Government s Sentencing Memorandum for Kilpatrick. 3
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 4 of 7 Pg ID 16397 profits, are subject to forfeiture under 18 U.S.C. 1963). Likewise, under 18 U.S.C. 981(a)(2)(A), the term proceeds means any property obtained as a result of an offense, and is not limited to the net gain or profit realized from the offense. Thus, whether or not a defendant shares the proceeds obtained from his offense with other persons, the entire amount obtained from the offense is forfeitable. Here, the Court must impose a forfeiture money judgment against Kilpatrick and must determine the amount that he will be ordered to pay. Rule 32.2(b)(1)(A), Federal Rules of Criminal Procedure. Kilpatrick could be required to forfeit the total amount obtained as a result of the RICO violation (Count 1), namely, the entire amount of contract revenues which were the subjects of the racketeering trial. United States v. Boring, 557 F.3d 707, 714 (6th Cir. 2009) (where defendant overbills Government agency, the order of restitution must be limited to the victim=s loss B i.e., the excess payment that defendant received through fraud; this contrasts with forfeiture which, because it is intended to be punitive, allows forfeiture of the entire payment to the defendant, irrespective of the victim=s loss). The government, however, has chosen to seek a conservative money judgment in the amount of $4,584,423.00, which is the amount of proceeds for which this Court has determined Kilpatrick should be held responsible. The government believes this amount constitutes a very reasonable 4
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 5 of 7 Pg ID 16398 estimate of proceeds obtained as a result of Kilpatrick s RICO violation (Count 1). Kilpatrick and co-defendant Ferguson will be jointly and severally liable to pay this amount. United States v. Corrado, 227 F.3d at 558 (co-conspirators in a RICO enterprise should be held jointly and severally liable for the reasonably foreseeable proceeds of the enterprise, and are not limited to amounts each defendant personally obtained). 5 With regard to each of the extortion convictions (Counts 2-4 and 9), the money judgments should be broken down as follows: Count Money Judgment 2 & 3 $2,082,431 4 $1,349,000 9 $1,152,992 Each of these amounts are included in the money judgment on Count One, and therefore, would not be collected in addition to the amount owed under Count One assuming that all counts of conviction are affirmed on appeal. V. CONCLUSION For the foregoing reasons, the government requests the Court to order that Kilpatrick must pay the following amounts based upon the following counts of 5 United States v. Corrado, 286 F.3d 934, 937-38 (6th Cir.2002) (Corrado II) (holding that a RICO forfeiture verdict may provide for joint and several liability and that conspirators are liable even for proceeds of crimes not part of the conspiratorial enterprise). 5
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 6 of 7 Pg ID 16399 conviction: Count Money Judgment 1 $4,584,423.00 2 & 3 $2,082,431 4 $1,349,000 9 $1,152,992 Respectfully submitted, BARBARA L. McQUADE United States Attorney s/linda AOUATE s/r. MICHAEL BULLOTTA November 14, 2013 November 14, 2013 s/mark CHUTKOW November 14, 2013 6
2:10-cr-20403-NGE-MKM Doc # 503 Filed 11/14/13 Pg 7 of 7 Pg ID 16400 CERTIFICATE OF SERVICE I hereby certify that on November 14, 2013, the foregoing was electronically filed using the ECF system which will send notification of such filing to all ECF participants. Respectfully submitted, BARBARA L. McQUADE United States Attorney s/linda Aouate LINDA AOUATE (P70693) 211 W. Fort Street, Ste. 2001 Detroit, MI 48226 (313) 226-9587 linda.aouate@usdoj.gov 7