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United States v. McManus

United States District Court, Eastern District of Pennsylvania

October 6, 2014

UNITED STATES OF AMERICA
v.
MATTHEW McMANUS

MEMORANDUM

YOHN, J.

On February 19, 2014, defendant Matthew McManus was convicted by a jury of wire fraud, conspiracy to commit mail and wire fraud, money laundering, obstruction of justice, and making false statements to the federal government for his involvement in an advance fee fraud scheme. After trial, the government moved for a forfeiture money judgment against McManus to deprive him of his ill-gotten gains. McManus opposed, arguing that notice of forfeiture was deficient, that forfeiture would violate the Sixth Amendment, and that joint and several liability should not be imposed. Because I find each of those arguments unavailing, I will grant the government's motion in part and order further briefing to determine the amount to be forfeited.

I. BACKGROUND[1]

McManus was the co-owner of Remington Financial Group ("Remington"), which held itself out as a company that could find financing to borrowers seeking loans for commercial projects. Remington offered to correct borrowers to financing, but only if those borrowers paid "advance fees" to receive the promised funds. In reality. Remington failed to secure, or even attempt to secure, financing for almost all of the borrowers who paid these fees. Through this scheme, McManus, his co-owner, and their employees collectively defrauded nearly two thousand victims out of more than $26 million over a period of approximately six years.

On April 26, 2012, a grand jury returned an indictment charging McManus with conspiracy to commit mail and wire fraud (18 U.S.C. § 371), wire fraud (18 U.S.C. § 1343), money laundering (18 U.S.C. § 1957), obstruction of justice (18 U.S.C. § 1505), and making false statements to the federal government (18 U.S.C. § 1001). A fifteen day jury trial commenced on January 23, 2014, and the jury returned a verdict of guilty on all counts on February 19, 2014. McManus filed a motion for judgment of acquittal or, in the alternative, a new trial on May 19, 2014, which I denied on September 2, 2014.

On March 20, 2014, the government moved for entry of a forfeiture money judgment of $26, 049, 893 against McManus, a sum stated as the amount of property that constitutes or is derived from proceeds traceable to the wire fraud (Counts 4 and 6) and conspiracy to commit mail and wire fraud (Count 1). McManus filed a response in opposition on March 27, 2014. The government replied on April 23, 2014.

II. DISCUSSION

The government has moved for forfeiture pursuant to 18 U.S.C. § 981 and 28 U.S.C. § 2461. The former statute, concerning civil forfeiture, provides that "property is subject to forfeiture to the United States" where such property "constitutes or is derived from proceeds traceable to a violation of [certain enumerated offenses] or any offense constituting 'specified unlawful activity' ... or a conspiracy to commit such offense." 18 U.S.C. § 981(a)(1)(C). The latter, in turn, provides:

If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case ....

28 U.S.C. § 2461(c). Because "specified unlawful activity" is defined at 18 U.S.C. § 1956(c)(7) to include wire fraud and mail fraud, property that constitutes or is derived from the proceeds of wire fraud or conspiracy to commit mail fraud and wire fraud is therefore subject to forfeiture. See United States v. Vampire Nation, 451 F.3d 189, 200 (3d Cir. 2006) ("[W]e read the plain language of § 2461(c), by virtue of the chain of cross-references leading to § 1956(c)(7) and § 1961(1), to explicitly permit criminal forfeiture for general mail fraud .. . .").

McManus does not dispute that forfeiture is available generally upon conviction for wire fraud and related conspiracy. But McManus contends both that the indictment provided deficient notice of forfeiture under Federal Rule of Criminal Procedure 32.2 and that ordering forfeiture would violate the Sixth Amendment under Apprendi v. New Jersey, 530 U.S. 466 (2000). McManus further argues that, even if the court finds forfeiture appropriate, joint and several liability should not apply. Finally, McManus disputes the government's calculation of the amount of funds subject to forfeiture.

A. Notice of Forfeiture

McManus argues first that forfeiture is unavailable in this case because the indictment failed to provide him with accurate notice that such a judgment could be entered upon conviction. For several reasons, that argument is unpersuasive.

A defendant's right to receive notice that the government could seek forfeiture stems from two sources. First, 28 U.S.C. § 2461 provides that "[i]f a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure." 28 U.S.C. § 2461(c). Second, Federal Rule of Criminal Procedure 32.2 commands that "[a] court must not enter a judgment of forfeiture in a criminal proceeding unless the indictment or information contains notice to the ...


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