United States v. Del Giudice
| Decision Date | 28 March 2022 |
| Docket Number | 20 CR 111-1 |
| Citation | 594 F.Supp.3d 998 |
| Parties | UNITED STATES of America, Plaintiff, v. Vincent DEL GIUDICE, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
AUSA, Ankur Srivastava, Terry M. Kinney, Assistant US Attorneys, Anthony Chmura, United States Attorney's Office, Chicago, IL, Pretrial Services, Probation Department, for Plaintiff.
Damon Matthew Cheronis, Ryan J. Levitt, Cheronis, Parente & Levitt LLC, Donna A. Rotunno, Law Offices of Rotunno & Giralamo, P.C., Chicago, IL, for Defendant.
PRELIMINARY ORDER OF FORFEITURE
The United States seeks a preliminary order of forfeiture pursuant to 18 U.S.C. § 1955(d), 18 U.S.C. § 981(a)(1)(C), 28 U.S.C. § 2461(c) and Fed. R. Crim. P. 32.2. (Dkt. 1, Dkt. 267, Dkt. 293). After a full hearing with live testimony and exhibits, the Court now enters its findings as to the forfeited assets. The Government's motion for forfeiture is granted in part and denied in part.
On February 19, 2020, a federal grand jury returned an indictment charging Defendant Vincent Del Giudice and others with conspiracy to conduct an illegal gambling business, running an illegal gambling business, and money laundering in violation of 18 U.S.C. §§ 371, 1955, and 1956. (Dkt. 1). The Indictment contained two forfeiture allegations. Forfeiture Allegation One called for the following property to be forfeited, pursuant to 18 U.S.C. § 1955(d), 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c) :
(See Dkt. 1 at 26-27). Forfeiture Allegation Two sought at least $113,625 as a personal money judgment as the proceeds of the alleged money laundering offense pursuant to 18 U.S.C. § 982(a)(1). (Id. at 28).
On February 2, 2021, Del Giudice pled guilty to one count of conspiracy to conduct an illegal gambling operation in violation of 18 U.S.C. § 371 (Count One) and to one count of money laundering conspiracy in violation of 18 U.S.C. § 1956(a)(2)(A) (Count Three). Del Giudice reserved his right to contest the assets sought by the Government in the plea agreement and his ability to argue that they were not subject to forfeiture. As such, Defendant put the Government to its burden of establishing the legality of the forfeiture and to challenge the forfeiture at a hearing before the Court. (Dkt. 136 at 12).
The Court subsequently held a three-day forfeiture hearing on October 18, October 20, and October 21, 2021. (See Dkts. 272-274). At the hearing, the Government presented testimony from expert witness FBI forensic examiner Brian Davis and FBI Senior Special Agent Chris Smith. Del Giudice presented testimony from former FBI Special Agent John Iannarelli. Following the hearing, the parties were permitted to file supplemental briefing based upon the hearing testimony. (Dkt. 293 (Gov. Brief) and Dkt. 294 (Def. Brief).) At the end of the three-day hearing and in its post-hearing brief, the Government presented a revised forfeiture money judgment of $3,505,398. (Tr. at 579:16-17; Dkt. 293 at 5). Del Giudice proposed an alternate money judgment of $1,247,779 (Dkt. 294 at 2).
Forfeiture is a mandatory part of a defendant's sentence. Libretti v. United States, 516 U.S. 29, 41, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995). "As soon as practical after a verdict or finding of guilty ... on any count in an indictment or information regarding which criminal forfeiture is sought, the court must determine what property is subject to forfeiture under the applicable statute." Fed. R. Crim. P. 32(b)(1)(A) ; see also United States v. Venturella , 585 F.3d 1013, 1019 (7th Cir. 2009) () (internal citations omitted).
The Government bears the burden of proof to establish that the property is subject to forfeiture by a preponderance of the evidence. United States v. Smith , 770 F.3d 628, 637 (7th Cir. 2014) ; see also United States v. Bader , 678 F.3d 858, 894-95 (10th Cir. 2012). In order to meet its burden, the Government must establish a nexus between the property seeking to be forfeited and the offense. United States v. Larry , 2021 WL 3235301 (11th Cir. 2021) ; Marino at. 3; United States v. Khan , see Fed. R. Crim P. 32.2(b)(1)(A). To prove such a nexus, the Government must prove that the property sought to be forfeited bears more than an incidental or fortuitous connection to the criminal activity. See, e.g., United States v. King , 231 F. Supp. 3d 872, 898 (W.D. Okla. 2017).
"The court's determination may be based on evidence already in the record, ... and on any additional evidence or information submitted by the parties and accepted by the court as relevant and reliable." Fed. R. Crim. P. 32.2(b)(1)(B). "If the forfeiture is contested, ... the court must conduct a hearing after the verdict ... of guilty." Id. Unless doing so is impractical, the court must enter the preliminary order sufficiently in advance of sentencing to allow the parties to suggest revisions or modifications before the order becomes final as to the defendant under Rule 32.2(b)(4). The preliminary order of forfeiture becomes final as to the defendant at sentencing, Fed. R. Crim. P. 32.2(b)(4)(A).
Prior to the forfeiture hearing, the Government filed a Daubert brief to bar the testimony of Defendant's witness John Iannarelli. (Dkt. 267). The Government challenged Iannarelli's lack of expertise in gambling and forfeiture. Del Giudice filed a responsive brief. (Dkt. 269). At the outset of the forfeiture hearing on October 18, the Court held a mini-Daubert hearing on the admissibility of Iannarelli's testimony. During this hearing, Iannarelli testified that he was not an expert in gambling, accounting, or forfeiture. (Tr. 16:22-24; Tr. 18:10-12; Tr. 20:16-21). He testified that he had several decades of experience as an FBI agent and used that experience to analyze whether there was enough evidence to bring the forfeiture charges the Government brought in this case. (Tr. 10:13-17). The defense represented that Iannarelli's role was to take the "voluminous material that exists in this case" and reach an opinion on whether it is enough "for the government to support its burden to establish the forfeiture number that it proposes." (Tr. 21:13-25). The Government objected to Iannarelli as lacking expertise, offering lay opinions that would not aid the trier of fact. (Tr. 23:3-21).
At the conclusion of the Daubert hearing, the Court permitted Iannarelli to testify during the forfeiture hearing. (Tr. 24:10). This was not a finding that Iannarelli was credible or a qualified expert under Federal Rule of Evidence 702. Rather, the Court decided that as the factfinder, it would hear Iannarelli's testimony and could later decide to strike his testimony or admit it but consider the weight and credibility it should be afforded (as with any witness). (Tr. 24:11-22). In its post-hearing brief, the Government renewed its request that Iannarelli's testimony be stricken because it was not credible and not based on any expertise in forfeiture, gambling, or financial or tax matters. (Dkt. 293 at 6).
It is undisputed that Iannarelli is not an expert in forfeiture, accounting, tax, or gambling. (Tr. 16:22-24; Tr. 18:10-12; Tr. 20:16-21). He is not a CPA, has almost no training or practical experience in gambling investigations, and has limited recent experience with forfeiture proceedings. His role as an expert, according to Defendant, was to analyze the evidence as an FBI Agent with over twenty years of experience and provide testimony on his analysis of that evidence. (Dkt. 294 at 2).
The Court declines to strike Iannarelli's testimony. However, permitting Iannarelli's testimony does not require the Court to give much weight to the testimony or credit his ultimate conclusions as true, particularly where the testimony goes beyond what his knowledge and expertise reasonably allow. See, e.g., In re Lake States Commodities, Inc. , 272 B.R. 233, 243 (Bankr. N.D. Ill. 2002), aff'd sub nom. Fisher v. Page , 2002 WL 31749262 (N.D. Ill. Dec. 3, 2002) (). This is particularly true here, where what Iannarelli is offering is essentially an opinion on the ultimate basis and calculation for forfeiture.
While Iannarelli's testimony as to the breadth of the evidence and analysis of the same may aid the Court, Iannarelli's proposed forfeiture amount based on Del Giudice's tax returns is unpersuasive when compared to the totality of the record before the Court. Iannarelli testified that he simply assumed the tax returns were accurate and correct. (Tr. 486:18-24) ("I'm making the assumption that he reported and paid his taxes.") Iannarelli testified that he had "no other information to indicate that he [Del Giudice] did not" pay all of his taxes. (Tr. 489:3-6). This ignores the evidence–including phone calls and documents recovered in Del Giudice's home—presented by the Government's qualified expert and the case agent as discussed infra that cast doubt upon the veracity of the tax returns. Iannarelli also concluded the tax returns were reliable without speaking to Del Giudice's accountant, despite not having any of his own expertise in financial materials or tax returns. (Tr....
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