United States v. Bokhari

• Decision Date: 08 July 2016
• Docket Number: Criminal Case No. 14-30044-MGM
• Parties: UNITED STATES OF AMERICA v. SYED BOKHARI, Defendant.
• Court: U.S. District Court — District of Massachusetts

UNITED STATES OF AMERICA v. SYED BOKHARI, Defendant.

Criminal Case No. 14-30044-MGM

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

July 8, 2016

MEMORANDUM AND ORDER REGARDING MAGISTRATE JUDGE'S MEMORANDUM AND ORDER ON DEFENDANT'S MOTION FOR RELEASE OF FUNDS AND GOVERNMENT'S MOTION FOR ACCESS TO RECORDS FILED EX PARTE

(Dkt. Nos. 27, 145, 156)

MASTROIANNI, U.S.D.J.

I. INTRODUCTION

On May 5, 2016, Magistrate Judge Katherine A. Robertson issued a memorandum and order denying Defendant Syed Bokhari's motion for release of funds and the government's motion for access to records filed ex parte. (Dkt. No. 156, "May 2016 Order.") Both parties filed objections. This court modifies the May 2016 Order solely with respect to its conclusion regarding Defendant's showing of financial need for access to restrained funds and affirms it in all other respects. Accordingly, both Defendant's and the government's motions are denied.

II. PROCEDURAL HISTORY AND RELEVANT FACTS

Defendant was indicted on October 16, 2014 and charged with wire fraud, money laundering, aiding and abetting contraband smokeless tobacco trafficking, and violations of the PACT (Prevent All Cigarette Trafficking) Act. (Dkt. No. 2.) On November 24, 2014, Defendant filed a motion seeking the release of certain seized assets (the "Tobacco Funds") he asserted were necessary to enable him to pay for counsel of his choice. (Dkt. No. 27.) On January 16, 2015, this court referred Defendant's motion to Judge Robertson pursuant to Federal Rule of Criminal Procedure 59(a) and 28 U.S.C. § 636(b)(1)(A). (Dkt. No. 49.) On July 27, 2015, following a hearing, Judge Robertson issued an order denying Defendant's motion on the basis that the government had demonstrated probable cause to believe that all the Tobacco Funds were subject to forfeiture. (Dkt. No. 112, "July 2015 Order.") Defendant objected to the July 2015 Order and the government raised an argument in its response to Defendant's objection that this court also considered. (Dkt. Nos. 120, 122.) After reviewing the July 2015 Order, this court issued an order on November 19, 2015 remanding the matter to Judge Robertson for a further hearing and decision on the preliminary question of Defendant's financial need for use of the Tobacco Funds to pay for counsel of his choice. (Dkt. No. 133, "November 2015 Order.") The November 2015 Order directed that, if Defendant wished to demonstrate financial need to use restrained assets to pay for counsel of his choice, he would have to file a comprehensive list of his assets, sources of income, expenses, and liabilities in order to paint the complete picture of his finances and ability to pay for counsel of his choice with unrestrained assets.

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 includes forfeiture allegations under the RICO Act, 18 U.S.C. § 1963(a), and the entirety of the Tobacco Funds are included as forfeitable property. In filings prior to the evidentiary hearing on his financial need, Defendant elected not to provide the financial information identified by this court, citing his Fifth Amendment right against compelled self-incrimination. (Dkt. No. 141.) The government filed affidavits from an IRS Special Agent to support its contention that Defendant "has substantial financial resources." In addition to identifying over $5 million in combined deposits to Defendant's personal bank accounts between July 2012 and December 2014 and documenting Defendant's spending on credit cards, travel, and automobiles, the affidavits stated that Defendant has not filedtax returns for 2012, 2013, or 2014. (Dkt. No. 144.) The government also moved for access to the financial information Defendant had previously filed ex parte and under seal or, in the alternative, for Judge Robertson to disregard those filings when ruling on Defendant's motion. (Dkt. No. 145.)

Judge Robertson held a hearing on the pending motions on February 10, 2016. (Dkt. No. 146.) On May 5, 2016, Judge Robertson issued an order denying Defendant's motion for release of funds and the government's motion for access to records filed ex parte. (May 2016 Order at 2.) Holding that "[i]t is well-settled that, regardless of Defendant's financial need, he is not entitled to release of the Tobacco Funds if there is probable cause to believe that the funds will be subject to forfeiture upon his conviction," Judge Robertson declined to resolve the question of Defendant's financial need and instead denied Defendant's motion by concluding all the Tobacco Funds would be forfeitable under the superseding indictment's broader RICO Act forfeiture provisions. (Id. at 18, 24.) Defendant objected to the court's forfeitability analysis related to the RICO Act. (Dkt. No. 157.) The government filed its own objection, to preserve its right to review, arguing that Defendant's motion should have been denied for failure to demonstrate financial need and that all the Tobacco Funds are also forfeitable under the money laundering charges in the superseding indictment. (Dkt. No. 158.)

III. STANDARD OF REVIEW

After a magistrate judge has issued an order on a nondispositive matter pursuant to Federal Rule of Criminal Procedure 59(a), the parties may file objections, and the district judge "must consider timely objections and modify or set aside any part of the order that is contrary to law or clearly erroneous." Fed. R. Crim. P. 59(a); see also 28 U.S.C. § 636(b)(1)(A). The district judge undertakes a de novo review of those sections of the order to which a timely objection has been made, while unopposed portions of the order are only required to be reviewed for plain error. See UnitedStates v. Wihbey, 75 F.3d 761, 767 (1st Cir. 1996); Barreto-Rivera v. United States, 887 F. Supp. 2d 347, 351-52 (D.P.R. 2012).

IV. DISCUSSION

A. Waiver Under Rule 59(a)

At the outset, the court would like to clarify its position on the rules governing objections to magistrate judge rulings on nondispositive matters under Federal Rule of Criminal Procedure 59(a). In filing its objection to the May 2016 Order, the government stated it agreed with the order's ultimate result of denying Defendant's motion and with the order's reasoning with respect to forfeitability under the RICO Act, but wished to preserve its arguments regarding other aspects of the order. The government asserted Defendant's motion should also have been denied for failure to demonstrate financial need and that the Tobacco Funds should also have been deemed forfeitable pursuant to the money laundering charges in the superseding indictment. The government indicated it filed its objection because this court's previous November 2015 Order found the government had waived certain arguments by failing to object to Judge Robertson's July 2015 Order. The government asserted that a district court can affirm the decision of a magistrate judge "on any basis available in the record," United States v. Rodríguez-Peña, 470 F.3d 431, 433 (1st Cir. 2006), but the government believed this court "takes a different view of waiver."

The court fully agrees that a district court can affirm the decision of a magistrate judge "on any basis available in the record." That is precisely what the court did in its November 2015 Order, which ruled in the government's favor, but on an argument the court found the government had waived. On the issue of waiver, the court's view is governed by Federal Rule of Criminal Procedure 59(a), which states "[a] party may serve and file objections" to a magistrate judge's order on a nondispositive matter and the district judge "must consider timely objections." The rule also specifically states "[f]ailure to object in accordance with this rule waives a party's right to review."The clear implication is that a party's right to review of a specific issue in the magistrate judge's order—as opposed to the district court's discretion to review such an issue—is only preserved by filing an objection. Any possible ambiguity is resolved by the Advisory Committee Notes, which confirm that Rule 59(a) "contain[s] a provision that explicitly states that failure to file an objection in accordance with the rule amounts to a waiver of the issue."

The government asserts that, "[i]f it were necessary to appeal a decision not because the party was aggrieved by the outcome but because the party disagreed with some aspect of a lower court's reasoning, appellate practice at the district court and at the court of appeals would be transformed markedly." The court recognizes this point, but this proceeding is not an ordinary appeal from a district court to an appeals court. This proceeding involves objections to a magistrate judge's order governed by the provisions of Rule 59(a), which clearly directs parties to file objections and which states that failure to object waives a party's right to review. The court is sensitive to the practical effects of its reading of this rule, but this should not cause such dire results as the government suggests. The Advisory Committee Notes to Rule 59 state that, "[d]espite the waiver provisions, the district judge retains the authority to review any magistrate judge's decision or recommendation whether or not objections are timely filed." While review "by the district court following such a waiver is discretionary and not a matter of right," United States v. Tooze, 236 F.R.D. 442, 446 (D. Ariz. 2006), a district court can exercise its discretion to resolve any issue and ensure the magistrate judge's order is modified as appropriate. That is what the court sought to do in its November 2015 Order, and what the court will do with this order. In fact, this case demonstrates the usefulness of the objection procedure under Rule 59(a), because it enabled the government to bring the...