United States v. Bokhari

• Decision Date: 05 May 2016
• Docket Number: Case No. 14-cr-30044-MGM
• Citation: 185 F.Supp.3d 254
• Parties: United States of America, Plaintiff, v. Syed Bokhari, Defendant.
• Court: U.S. District Court — District of Massachusetts

185 F.Supp.3d 254

United States of America, Plaintiff,

v.Syed Bokhari, Defendant.

Case No. 14-cr-30044-MGM

United States District Court, D. Massachusetts.

Signed May 5, 2016

Alex J. Grant, United States Attorney's Office, Springfield, MA, for Plaintiff.

Martin G. Weinberg, Martin G. Weinberg, PC, Boston, MA, for Defendant.

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION FOR RELEASE OF FUNDS NECESSARY FOR LEGAL DEFENSE AND ON THE GOVERNMENT'S MOTION FOR ACCESS TO RECORDS FILED EX PARTE AND UNDER SEAL(Dkt. Nos. 27 & 145)

ROBERTSON, United States Magistrate Judge

I. INTRODUCTION

Defendant Syed Bokhari ("Defendant") was initially indicted on charges of wire fraud, money laundering, aiding and abetting contraband smokeless tobacco trafficking, and violations of the PACT (Prevent All Cigarette Trafficking) Act (Dkt. No. 2). The indictment included forfeiture allegations, including an allegation that $1,015,523.48 in proceeds from the sale of 147 pallets of smokeless tobacco, cigars, and other non-cigarette tobacco products ("Tobacco Funds"), which the government seized from a warehouse in Scranton, Pennsylvania ("Scranton Warehouse"), was subject to forfeiture.

In December 2014, Defendant filed a motion seeking release of a portion of the Tobacco Funds to retain counsel of his choice (Dkt. No. 27). In July 2015, this court ruled that the government had demonstrated probable cause to believe that the Tobacco Funds were subject to forfeiture under the original indictment and denied Defendant's motion (Dkt. No. 112). The presiding District Judge reviewed this court's order and remanded the matter for a further evidentiary hearing before the undersigned to give Defendant the opportunity to make a showing that he had financial need for part or all of Tobacco Funds to pay counsel of his choice (Dkt. No. 133 at 14). On December 3, 2015, Defendant was charged in a superseding indictment with, among other things, conspiracy under the Racketeer Influenced and Corrupt Organizations ("RICO") Act in violation of 18 U.S.C. § 1962(d) (Dkt. No. 137). The superseding indictment also contains forfeiture allegations, including the allegation that the Tobacco Funds are subject to forfeiture under the RICO Act, 18 U.S.C § 1963(a).

While continuing to press his motion for release of a portion of the Tobacco Funds, Defendant has invoked his Fifth Amendment privilege against self-incrimination (Dkt. No. 141). The government opposes any release of the Tobacco Funds to Defendant and, by motion, seeks access to Defendant's financial information that previously was filed ex parte and under seal, or in the alternative, that the court disregard these filings in any ruling on Defendant's financial status (Dkt. No. 145). For the following reasons, Defendant's renewed motion for release of funds is denied. In light of the basis for the court's ruling on Defendant's motion, the government's motion for access to records that were filed ex parte and under seal is also denied.

II. PROCEDURAL BACKGROUND

This court's order of July 27, 2015 details the procedural history of this case prior to that date, as follows (Dkt. No. 112). See United States v. Bokhari , Criminal Case No. 3:14–300440–MGM, 2015 WL 4529611 (D.Mass. July 27, 2015) (" Bokhari I ").

On June 5 and 8, 2012, pursuant to search and seizure warrants issued by this court, the government seized assets of Defendant, including bank accounts, motor vehicles, cash, and tobacco products that were in the Scranton Warehouse ("Scranton Tobacco") (Dkt. No. 98 at 1). On October 1, 2012, the government filed a civil forfeiture proceeding for possession of the seized assets (Case # 3:12-cv-30167-RWZ). In November 2013, after certain assets had been returned to Defendant, the parties entered into a settlement agreement in the civil forfeiture case, which provided, inter alia, that the United States would retain custody of the Scranton Tobacco unless the parties agreed to the forfeiture or release of the Scranton Tobacco or the United States filed an indictment that included the Scranton Tobacco as forfeitable, in which case the parties agreed that the United States would retain custody of the Scranton Tobacco until final adjudication of the criminal case, or until such time as "an order for the return of some or all of the Scranton Tobacco prior to the final adjudication of the criminal case was entered by the District Court presiding over such criminal case" (Dkt. No. 279-1 at 13, Docket for Case # 3:12-cv-30167-RWZ).

Bokhari I , at *1–2.

In compliance with an agreement for interlocutory sale between the government and Defendant, the Scranton Tobacco was sold at auction (Dkt. No. 98-3). The 147 pallets of tobacco products yielded the Tobacco Funds, $1,015, 523.48 after sales expenses (Dkt. No. 96 at 7, Exhs. 41, 42).

On October 16, 2014, Defendant was charged in a thirty-two count indictment with, inter alia, conspiracy to commit money laundering, specific acts of money laundering, and money laundering in violation of 18 U.S.C. §§ 1957 and 2 (Dkt. No. 2). The indictment included the Tobacco Funds as forfeitable property (id. ). Defendant's Motion for Release of Funds Necessary for Legal Defense was filed on November 24, 2014 (Dkt. No. 27). "[F]ollowing a review of [the parties' ex parte ] submissions, the court allowed so much of Defendant's Motion as sought an evidentiary hearing on the question of the Government's right to a continuing pre-trial restraint on assets Defendant claims he needs to retain his counsel of choice (Dkt. No. 73)." Bokhari I , at *2.

The evidentiary hearing was held on March 26, 2015 (Dkt. No. 88). On July 27, 2015, the court denied Defendant's motion based upon the government's demonstration of probable cause to believe that the Tobacco Funds would be forfeit if Defendant were convicted of money laundering. See Bokhari I , at *7–10, *12. Defendant objected to this court's order (Dkt. No. 120). See Fed. R. Crim. P. 59(a). The government countered that this court's ruling was correct and argued that Defendant should not have been granted an evidentiary hearing because he failed to make the requisite showing of financial need for the funds (Dkt. No. 122). After a hearing on November 19, 2015, the District Judge determined that a "new hearing before [this court] on the question of Defendant's financial need is required" and stated that, to make an adequate showing in support of his motion for release of funds Defendant would need to produce "additional documentary evidence that demonstrates Defendant's net worth and provides a comprehensive listing of his assets, sources of income, expenses, and liabilities" in order for Defendant to prove his financial need by a preponderance of the evidence (Dkt. No. 133 at 11, 13-15). United States v. Bokhari , Criminal Case No. 14–30044–MGM, 2015 WL 7303535, at *6–7 (D.Mass. Nov. 17, 2015) (" Bokhari II ").

On December 3, 2015, Defendant was charged by way of a thirty-five count superseding indictment with the following crimes: racketeering conspiracy, in violation of 18 U.S.C. § 1962(d) (count one); wire fraud (counts two through eleven); aiding and abetting contraband smokeless tobacco trafficking (counts twelve through sixteen); conspiracy to commit money laundering (count seventeen); specific acts of money laundering (counts eighteen through twenty-five); money laundering in violation of 18 U.S.C. § 1957 (counts twenty-six through thirty); and violation of the PACT Act (counts thirty-one through thirty-five) (Dkt. No. 137). In addition, the government moved for asset forfeiture pursuant to 18 U.S.C. § 1963 (RICO), 18 U.S.C. § 981 and 28 U.S.C. § 2461 (wire fraud and contraband smokeless tobacco trafficking), and 18 U.S.C. § 982 (money laundering) (id. ). The Tobacco Funds are included as forfeitable property (id. ).

At Defendant's December 10, 2015 arraignment on the superseding indictment, Defendant represented that he intended to file additional documentary evidence demonstrating his net worth consistent with the District Judge's Memorandum and Order, and that he was not moving for leave to file this evidence on an ex parte basis. The court set deadlines for submissions by the parties of further filings related to Defendant's motion for release of funds on a sealed basis. Rather than filing a comprehensive listing of his assets, sources of income, expenses, and liabilities, Defendant's further filing invoked his right against compelled self-incrimination under the Fifth Amendment to the United States Constitution due to the "nature of the allegations contained in the Superseding Indictment" (Dkt. No. 141). For its part, the government filed two affidavits from an Internal Revenue Service investigator, which provided some additional information about Defendant's financial resources, including the fact that Defendant did not file income tax returns for the years 2012, 2013, and 2014 (Dkt. No. 144; Dkt. No. 144-2 ¶8). The government also moved for access to Defendant's financial information previously filed ex parte and under seal, or, in the alternative, for the court to disregard those financial disclosures when ruling on Defendant's motion for access to the Tobacco Funds (Dkt. No. 145). The parties presented argument on the Defendant's motion for release of funds (Dkt. No. 146), and, thereafter, filed supplemental briefs addressing the effect of the RICO allegations in the superseding indictment on the government's right to a pre-trial restraint of the Tobacco Funds (Dkt. Nos. 149 and 151).

III. RELEVANT FACTS ALLEGED IN THE SUPERSEDING INDICTMENT TO SUPPORT THE CHARGE OF CONSPIRACY TO VIOLATE THE RICO ACT

The government alleges that from about 2005 until June 5, 2012, when the search and seizure warrant was executed at the Scranton Warehouse, Defendant conducted a racketeering conspiracy through his control of an enterprise, which the government christens Bokhari, Inc., and which this court will refer to as the alleged RICO enterprise ("ARE"), which operated...