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United States v. Hallinan

United States District Court, E.D. Pennsylvania

June 27, 2018

UNITED STATES OF AMERICA
v.
CHARLES M. HALLINAN

          MEMORANDUM

          EDUARDO C. ROBRENO, JUDGE

         Following a jury trial, Defendant Charles M. Hallinan was convicted of conspiracy to violate the Racketeer Influenced and Corrupt Organization (“RICO”) Act, conspiracy to commit fraud, mail fraud, wire fraud, and money laundering. The Government now seeks to forfeit Hallinan's alleged proceeds of the RICO conspiracy and twenty-two specific properties pursuant to 18 U.S.C. § 1963(a). Hallinan contests both the Government's proposed forfeiture money judgment amount and the forfeiture of the individual properties. The Court held a hearing pursuant to Federal Rule of Criminal Procedure 32.2(b)(1)(B), and is now ready to issue a preliminary order of forfeiture. This memorandum constitutes the Court's findings of fact and conclusions of law in support of the preliminary order of forfeiture.

         For the reasons that follow, the Court finds that the Government is entitled to the forfeiture of (1) $65, 339, 327 as proceeds of the RICO conspiracy charged in Counts One and Two of the Superseding Indictment pursuant to 18 U.S.C. § 1963(a)(3); (2) $90, 000 as property involved in the commission of the offenses charged in Counts Nine through Seventeen of the Superseding Indictment pursuant to 18 U.S.C. § 982(a)(1); (3) Hallinan's right, title and interest in twenty-one properties as property that is an interest in the RICO enterprise, pursuant to 18 U.S.C. § 1963(a)(2)(A); and (4) Hallinan's right, title and interest in an apartment located in Boca Raton, Florida, as property that afforded a source of influence over the RICO enterprise pursuant to 18 U.S.C. § 1963(a)(2)(D).

         1. PROCEDURAL HISTORY

         On March 31, 2016, Hallinan was indicted by a grand jury on two counts of conspiracy to violate the RICO Act in violation of 18 U.S.C. § 1962(d), one count of conspiracy to commit fraud, in violation of 18 U.S.C. § 371, two counts of mail fraud and aiding and abetting mail fraud, in violation of 18 U.S.C. §§ 1341 and 2, three counts of wire fraud and aiding and abetting wire fraud, in violation of 18 U.S.C. §§ 1343 and 2, and nine counts of money laundering, in violation of 18 U.S.C. § 1956(a)(2). ECF No. 1. Hallinan's co-defendant Randall P. Ginger was indicted on the same charges, and Hallinan's co-defendant Wheeler K. Neff was indicted on all of the same charges except money laundering. See Id. A second grand jury was later empaneled and returned a superseding indictment on December 1, 2016. ECF No. 87.

         Hallinan and Neff filed a motion to dismiss the charges against them on February 8, 2017, ECF No. 149, which the Court denied on August 15, 2017, ECF No. 203. A jury trial commenced on September 26, 2017, against Hallinan and Neff.[1]

         On November 27, 2017, the jury returned a guilty verdict against both Defendants on all counts of the superseding indictment. On December 4, 2017, on the basis of Hallinan's conviction, the Government filed a motion for a preliminary order of forfeiture and proposed findings of fact and conclusions of law in support of the proposed order. ECF No. 326. On December 8, 2017, Hallinan filed a response to the Government's motion for a preliminary order of forfeiture, including Hallinan's alternate proposed findings of fact and conclusions of law. ECF No. 328.

         On December 12, 2017, the Court ordered the Government to file a reply in further support of its motion for a preliminary order of forfeiture and proposed findings of fact and conclusions of law, see ECF No. 338, which the Government filed on January 10, 2018, ECF No. 342. The Court also permitted Hallinan to file a sur-reply to the Government's motion, see ECF No. 338, which Hallinan filed on January 31, 2018, ECF No. 356. On April 6 and April 25, 2018, the Court held a hearing on the Government's motion for a preliminary order of forfeiture. ECF No. 384.

         The Court has reviewed the relevant trial testimony and exhibits, the parties' proposed findings of fact and conclusions of law, the parties' memoranda in support of their proposed findings of fact and conclusions of law and the responses and replies thereto, the arguments made at the forfeiture hearing held on April 6 and April 25, 2018, and the exhibits introduced at that hearing. Upon this record, as well as credibility findings, the Court makes its findings of fact and conclusions of law.

         II. FINDINGS OF FACT

         1. The Government properly signaled its intent to seek a forfeiture judgment as part of the punishment in this case through its filing of three notices of forfeiture, as well as a Bill of Particulars. See ECF No. 87 at 47-54; ECF No. 158; ECF No. 202; ECF No. 253.

         2. The evidence at trial proved that Hallinan established, operated, controlled, and conducted the Hallinan Payday Lending Enterprise charged in Count One of the Superseding Indictment (“the HPDLE”). See Gov't Exs. 1-8, 30-50, 61-76, 81-85, 99-115, 120-158, 161-66, 168-200, 232, 236, 238, 241-296, 317-355, 337-425, 477-471, 501-03, 506-08, 511-12, 514-19, 521-529, 531-37, 541-82, 585-87, 591-95, 600-02, 607-08, 650-56, 665-69, 671-77, 685, 695-96, 698-700, 703-727, 731-42, 748-54, 756-57, 759, 761, 763, 766, 768, 700, 772-78, 780-81, 791-94, 799, 801-48, 850-87, 878-82, 884, 886, 889, 892-93, 898-903, 911-24, 927-33, 936, 941, 943, 945-46, 948-49, 951-92, 976, 984-85, 989-91, 995, 997-98, 1000.

         3. The evidence at trial proved that the HPDLE received $490, 904, 533 in gross receipts during the course of the conspiracy charged in Count One, as calculated from the information provided by Intercept, the third party company which processed the disbursements and payments for the loans extended by the HPDLE. See Gov't Exs. 500A-D, 500E.

         4. The evidence at trial proved that the HPDLE also received $2, 226, 857 in gross receipts during the course of the conspiracy charged in Count One, as calculated from information provided by PowerPay, another third party company which processed the disbursements and payments for the loans extended by the HPDLE.

         5. Hallinan did not own or operate the Rubin Payday Pending Enterprise charged in Count Two of the Superseding Indictment (“the RPDLE”). However, Hallinan participated in the conduct of the RPDLE by assisting it with the brokering of relationships with Indiana tribes, so that the RPDLE could enter into sham relationships with those tribes. In connection with this assistance, Adrian Rubin paid Hallinan $100, 000.

         6. Therefore, the total amount of the gross receipts received by Hallinan in connection with the RICO conspiracies charged in Counts One and Two is $493, 431, 390.

         7. The evidence at trial established the Hallinan paid Ginger a total of $90, 000 in nine payments to assist in the fraud related to the Indiana Litigation, as charged in Counts Nine through Seventeen of the Superseding Indictment. See Gov't Exs. 100A, 317-335.

         8. As alleged in the Superseding Indictment and as proven at trial, the HPDLE was a RICO enterprise which included, but was not limited to, the following entities:[2]

a. TC Services Corp., d/b/a “Telecash” and “Tele-Ca$h” and formerly known as “Tele-Ca$h” and “RAC” (“TC Services”);
b. CRA Services, d/b/a “Cashnet” (“CRA Services”);
c. Main Street Services Corp. d/b/a “Easy Cash” (“Main Street”);
d. Tahoe Financial Advisors, d/b/a “Axcess Cash” (“Tahoe”);
e. National Money Service, Inc., a/k/a “NMS, Inc., ” which did business under multiple trade names (“NMS”);
f. First East, Inc., d/b/a “Xtra Cash, ” d/b/a “Fast Funding First East, ” d/b/a “Payday Loan Direct” (“First East”);
g. Cheyenne Servicing Corp. (“Cheyenne”);
h. CR Services Corp. (“CR Services”);
i. Apex 1 Processing, Inc., d/b/a “Paycheck Today, ” “Cash Advance Network, ” and “Instant Cash USA” (“Apex 1 Processing”);
j. Cash Advance Network, Inc. (“CANI”);
k. Instant Cash, USA, Inc. (“ICU”);
l. Fifth Avenue Financial, Inc., d/b/a “My Next Paycheck” (“Fifth Avenue”);
m. Palmetto Financial, Inc., d/b/a “My Payday Advance” (“Palmetto”);
n. Sabal Financial, Inc., d/b/a “Your Fast Payday” (“Sabal”);
o. Tribal Lending Enterprises, Division A (“TLE-A”);
p. Micro Loan Management, Division A (“MLM-A”);
q. Sequoia Tribal Enterprises (“STE”);
r. Sequoia Tribal Management Services (“STMS”);
s. HL Funding, Inc. (“HL Funding”);
t. HL Services, Inc. (“HL Services”);
u. Blue Water Management Services, LLC (“Blue Water Management”);
v. Blue Water Funding Group (“Blue Water Funding”);
w. Hallinan Capital Corp. (“HCC”);
x. Mill Realty Management, LLC (“Mill Realty”);
y. Apex 1 Lead Generators, Inc., (“Apex 1 LG”); and
z. Clarity Services, Inc. (“Clarity”).

         9. The Government seeks the forfeiture of twenty-one properties it alleges are interests of the RICO enterprise charged in Count One, as follows:

a. All funds in account number 009418321146 in the name of Hallinan Capital Corp., at Bank of America (“Property 1”);
b. All funds in account number 6236347844 in the name of Hallinan Capital Corp., at Citizens Bank (“Property 2”);
c. All funds in account number 9943232101 in the name of Hallinan Capital Corp., at Vanguard (“Property 3”);
d. All funds in account number 6236347690 in the name of Apex 1 Lead Generators, at Citizens Bank (“Property 4”);
e. All funds in account number 6236347771 in the name of Blue Water Funding Group, LLC, at Citizens Bank ...

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