United States v. Human Servs. Assocs., LLC

• Citation: 216 F.Supp.3d 841
• Decision Date: 21 October 2016
• Docket Number: Case No. 1:16-cr-00018-RJJ-3
• Parties: UNITED STATES of America, Plaintiff, v. HUMAN SERVICES ASSOCIATES, LLC, Defendant.
• Court: U.S. District Court — Western District of Michigan

216 F.Supp.3d 841

UNITED STATES of America, Plaintiff,

v.HUMAN SERVICES ASSOCIATES, LLC, Defendant.

Case No. 1:16-cr-00018-RJJ-3

United States District Court, W.D. Michigan, Southern Division.

Signed October 21, 2016

Michael A. MacDonald, U.S. Attorney, Grand Rapids, MI, for Plaintiff.

Scott Graham, Scott Graham PLLC, Portage, MI, Keith W. Turpel, Kalamazoo, MI, for Defendant.

MEMORANDUM OPINION

PHILLIP J. GREEN, United States Magistrate Judge

This matter is before the Court on defendants Tapera Albert Chiwocha, Sr., and Callista Suzena Chiwocha's requests to appoint counsel for co-defendant Human Services Associates, LLC ("HSA"). The government supports these requests, and it has agreed to release seized HSA assets to be used by the Court to compensate appointed counsel.

For the reasons stated herein, the Court will grant the Chiwochas' requests and appoint counsel to represent HSA. Such appointment is contingent upon the government's release of seized funds sufficient to compensate counsel at a rate, and under the same terms and conditions, as provided by the Criminal Justice Act, 18 U.S.C. § 3006A. The release of funds has been approved by the Court, pursuant to the parties' stipulation, in United States v. $77,773.46 in Funds from Citizens Bank Account # XXXXXXXXXX, et al. , Case No. 1:12–cv–495 (J. Maloney) (Joint Stipulation, ECF No. 44; Oct. 21, 2016, Order, ECF No. 45).

Procedural History

The procedural history behind the pending request for appointment of counsel for HSA is both unusual and somewhat complex. It warrants some explication.

1. The Parallel Civil Forfeiture Action

On May 16, 2012, the United States filed a civil forfeiture action in rem seeking the forfeiture of, among other things, funds in various bank accounts, which the government seized and which the government alleges was derived from criminal activity. (Verified Complaint, United States v. $77,773.46 in Funds from Citizens Bank Account # XXXXXXXXXX, et al. , Case No. 1:12–cv–495, ECF No. 1 (J. Maloney)). Among the bank accounts at issue in the civil forfeiture action are those held by Tapera Chiwocha, Callista Chiwocha, and HSA. The allegations of criminal activity are essentially the same as those included in the pending criminal case: conspiracy to defraud the Internal Revenue Service through the filing of fraudulent tax returns and money laundering. (Id. , ECF No. 1, PageID.3-5, 7).

Tapera Chiwocha, Sr., and Callista Chiwocha are each represented in the civil matter by his or her respective court-appointed counsel in the criminal case. The docket indicates that an attorney represents HSA in the civil matter, although it is unclear at this juncture the status of the attorney's relationship with HSA. The civil action has been stayed since February 23, 2016, pending resolution of the pending criminal case. (Order, Case No. 1:12–cv–495, ECF No. 42).

2. The Criminal Prosecution

Defendants Tapera Chiwocha, Sr., and Callista Chiwocha had been under federal investigation for some time prior to being charged in this case. They were on notice of the potential for criminal charges by May 16, 2012, the date the government filed the civil forfeiture action. (See Complaint, Case No. 1:12–cv–495, ECF No. 42; June 21, 2012, Claim of Interest of Tapera Chiwocha, Sr., ECF No. 8; June 25, 2012, Claim of Interest of Callista Chiwocha, ECF No. 9). In March 2014, the government notified the Chiwochas that they were targets of a criminal investigation into allegations of fraud against the government. (ECF No. 1 (restricted access)). The Court granted their respective requests for appointment of counsel. (ECF No. 2).

On January 27, 2016, the grand jury returned an indictment against them, charging each with one count of conspiracy to defraud the government through the filing of false tax returns, four counts of making false claims to the government, and four counts of converting government property. (ECF No. 7). The conspiracy count alleges, among other things, that, in February 2011, Tapera Chiwocha, Sr., "filed articles of incorporation with the State of Michigan for ‘Human Services Associates, LLC’ " (id. , Overt Act 3, PageID.20); that the Chiwochas together opened several business bank accounts under the name HSA (id. , Overt Acts 6, 8, 11, PageID.21-22); and that they used these accounts for depositing fraudulently-obtained tax refunds (id. , Overt Acts 12, 17, 18, 20, 21 PageID.22-24).

Each of the Chiwochas was arraigned on the respective charges against them on February 4, 2016, and each was released on bond. (Minutes, ECF No. 19, 23). Trial was set for March 8, 2016. (Feb. 8, 2016, Order, ECF No. 26). The Court granted the Chiwochas' motion to continue the trial date due to the volume of discovery produced by the government, rescheduling the trial for September 26, 2016. (Feb. 25, 2016, Order, ECF No. 39). On March 24, 2016, the case was reassigned to Chief Judge Robert J. Jonker, pursuant to the district's related case rule, LCRR 56.5(d)(iii)(A)(5), and trial was rescheduled to September 13, 2016. (Admin. Order, ECF No. 43; March 24, 2016, Order, ECF No. 45).

On May 25, 2016, the grand jury returned a superseding indictment. (ECF No. 55). HSA was added as a defendant to the conspiracy charge (Count 1). (Id. , PageID.188). The grand jury also added aggravated identity theft charges (Counts 10-14) and money laundering charges (Counts 15-29). (Id. , PageID.209-31). HSA was named in all but two of the money laundering charges (Counts 15-27). (Id. , PageID.209-29). HSA was also included in the two forfeiture allegations. (Id. , PageID.232-37).

On June 1, 2016, the Chiwochas were each arraigned on the charges in the superseding indictment. (Minutes, ECF No. 57, 58). During the arraignment, the government requested that counsel be appointed to represent HSA, which request was joined by counsel for Tapera Chiwocha, Sr.¹ The Court granted this request from the bench, despite its expressed concerns as to whether HSA had a Sixth Amendment right to appointment of counsel. (See Minutes, ECF No. 57, 58; see also June 2, 2016, Order, ECF No. 59, PageID.241).

The Court vacated the order of appointment of counsel the next day, after learning the Guide to Judiciary Policy precludes appointment of counsel under the Criminal Justice Act (CJA) for corporate defendants. (See ECF No. 59, PageID.241-42 (citing 7A Guide to Judiciary Policy, Ch. 2, § 210.20.50 (internet link omitted)). The Court ordered the government and the Federal Public Defender to file briefs addressing five issues: (1) whether a Michigan limited liability company (LLC) should be treated as a corporation for purposes of the Sixth Amendment right to counsel; (2) whether an LLC has a Sixth Amendment right to Court-appointed counsel, assuming it is indigent; (3) whether an LLC has a statutory right under the CJA to the appointment of counsel as a "financially eligible person," 18 U.S.C. § 3006A(a)(1) ; (4) whether the Court has inherent authority to appoint counsel for an LLC, assuming the LLC has neither a constitutional or statutory right to one; and (5) whether there is any source of funding to compensate appointed counsel, absent authority under the CJA. (ECF No. 59, PageID.242).

The Federal Public Defender and the government each filed their respective briefs on June 17, 2016. (ECF No. 63, 64). Counsel for Tapera Chiwocha, Sr., filed a brief on June 20, 2016, addressing these issues.² (ECF No. 65). A hearing was conducted on June 22, 2016, at which counsel for all three defendants were present, along with the Federal Public Defender. (Minutes, ECF No. 70).

On June 24, 2016, the Court issued a summons to HSA to appear on July 14, 2016, and answer the charges in the superseding indictment. (ECF No. 71). Based on information provided by counsel during the June 22, 2016, hearing, the Court addressed the HSA summons to Callista Chiwocha as its registered agent. (Id. , PageID.336).

The Court conducted an initial appearance for HSA on July 14, 2016. (Minutes, ECF No. 82). Callista Chiwocha appeared, along with her court-appointed counsel. (Id. , PageID.372). Ms. Chiwocha, through counsel, requested that the Court appoint a lawyer for HSA, attesting to the fact that HSA lacked the financial resources to retain counsel. (See July 14, 2014, Order, ECF No. 83, PageID.373-74). Callista Chiwocha's counsel advised the Court that Ms. Chiwocha had the legal authority to make decisions for, and to bind, HSA. (See id. , PageID.374). Counsel for the United States concurred in this assessment based on his review of documents obtained by the government. (See id. (colloquy available through audio recording of July 14, 2016, hearing)). Counsel for Tapera Chiwocha, Sr., challenged Callista Chiwocha's authority to act on behalf of HSA, however, asserting that Mr. Chiwocha alone had such authority. (See id. ).

It being necessary that the Court ascertain who has the authority to make decisions on behalf of HSA for the purpose requesting the appointment of counsel, the Court ordered briefing on the issue. (ECF No. 83, PageID.374-75). Counsel for Tapera Chiwocha, Sr., filed a brief on July 28, 2016. (ECF No. 88). Counsel for Callista Chiwocha filed a brief on August 2, 2016, and an "addendum" to the brief on August 9, 2016. (ECF No. 93, 96). The United States filed its responsive brief on August 16, 2016. (ECF No. 97).

In response to the Court's directive (see July 14, 2016, Order, ECF No. 83, PageID.373), the United States provided notice of its willingness to release seized HSA assets "for the sole purpose of providing funding to compensate court-appointed counsel at the same rate set by, and under the same terms and conditions provided in the Criminal Justice Act." (ECF No. 101, PageID.428). The government conditioned this offer on three judicial findings: (1) HSA's indigency, (2) a lack of judicial resources to pay counsel, and (3) an unwillingness to appoint counsel on a pro bono basis. (Id. ). The government has seized a total of...