United States v. Jones

• Decision Date: 21 December 2016
• Docket Number: No. 15-1792,15-1792
• Citation: 844 F.3d 636
• Parties: United States of America, Plaintiff–Appellee, v. Bruce Jones, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

844 F.3d 636

United States of America, Plaintiff–Appellee,

v.Bruce Jones, Defendant–Appellant.

No. 15-1792

United States Court of Appeals, Seventh Circuit.

Argued September 8, 2016

Decided December 21, 2016

Brian L. Reitz, Bradley P. Shepard, Bob Wood, Attorneys, Office of the United States Attorney, Indianapolis, IN, for Plaintiff–Appellee.

Sarah O'Rourke Schrup, Attorney, Northwestern University School of Law, Bluhm Legal Clinic, Chicago, IL, for Defendant–Appellant.

Before Wood, Chief Judge, and Kanne and Hamilton, Circuit Judges.

Hamilton, Circuit Judge.

This appeal in a criminal case presents an unusual combination of offenses: health care fraud and unlawful possession of firearms and ammunition. Defendant Bruce Jones was both a family counselor and a firearms enthusiast who collected dozens of guns and thousands of rounds of ammunition. Jones had a prior felony conviction, so it was a federal crime for him to possess firearms and ammunition. The FBI discovered these weapons while investigating Jones for allegedly fraudulent health care billing. A federal grand jury charged Jones with three counts of possessing firearms and ammunition in violation of 18 U.S.C. § 922(g)(1) and one count of health care fraud in violation of 18 U.S.C. § 1347. The district court bifurcated the case for separate trials on the firearms charges and the health care fraud charge. The juries convicted Jones on all counts. The district court sentenced Jones to 90 months in prison on his fraud conviction and 100 months on each felon-in-possession conviction, with all terms to be served concurrently.

Jones appeals and raises four distinct issues. First, he contends that the ex parte pretrial restraint of certain life insurance policies violated his Fifth and Sixth Amendment rights. Second, he argues that the district court erroneously denied his request for new counsel during his fraud trial. Third, he contends that he was denied the opportunity to testify at his fraud trial. Fourth, he challenges the court's sentencing guideline computation. We affirm in all respects.

I. Pretrial Restraint of Assets

Jones first challenges the pretrial restraint of six life insurance policies titled in his name. The government listed these policies in a forfeiture allegation in the controlling, second superseding indictment. On April 15, 2014, following Jones's conviction on the felon-in-possession charges but before his fraud trial, the government filed an ex parte application under 28 U.S.C. § 2461(c) and 21 U.S.C. § 853(e)(1)(A) to restrain those policies in anticipation of post-conviction forfeiture. The district court entered a restraining order that same day. Jones contends that the pretrial restraint violated his Sixth Amendment right to hire counsel of choice and his Fifth Amendment right to due process of law.

Ordinarily, we review de novo questions of constitutional law. See Anderson v. Milwaukee County , 433 F.3d 975, 978 (7th Cir. 2006). But there is a wrinkle here: Jones did not object at the time that his life insurance policies were restrained. Nor did he raise an objection at any point during the district court proceedings even though the restraining order invited him to "petition for a pre-trial hearing if he can demonstrate that he has no other assets available with which to retain counsel" or if he could show that the restrained policies were "not subject to forfeiture." Where a defendant fails to lodge a timely objection before the district court, we review only for plain error, assuming the defendant has not actually waived the point. See United States v. Bickart , 825 F.3d 832, 837 (7th Cir. 2016) ("To demonstrate plain error, defendants must show: (1) an error or defect, (2) that is clear or obvious, (3) affecting the defendants' substantial rights. Even then, we have discretion to correct the error if it seriously impugns the fairness, integrity, or public reputation of the judicial proceedings, but we need not do so.") (citations omitted).

To excuse his failure to raise this issue in the district court, Jones argues that the legal landscape shifted while his appeal was pending, creating an analytical path that was not available to him in 2014. Specifically, Jones points to Luis v. United States , 578 U.S. ––––, 136 S.Ct. 1083, 194 L.Ed.2d 256 (2016). In Luis , the Supreme Court held that the "pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the Sixth Amendment." Id. at 1088 (plurality opinion) (emphasis added); see also id. at 1096 (Thomas, J., concurring in the judgment) (agreeing with plurality that a "pretrial freeze of untainted assets violates a criminal defendant's Sixth Amendment right to counsel of choice"). In so holding, the plurality distinguished two earlier cases in which the Court had found no Sixth Amendment defect in forfeiture proceedings. Id. at 1090–91 (plurality opinion). Compare Caplin & Drysdale, Chtd. v. United States , 491 U.S. 617, 109 S.Ct. 2646, 105 L.Ed.2d 528 (1989) (post-conviction forfeiture that deprived defendant of funds he would have used to pay attorney did not violate Sixth Amendment because, pursuant to statute, title to funds vested in United States upon defendant's commission of crime), with United States v. Monsanto , 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (pretrial restraint that deprived defendant of tainted assets traceable to crime likewise did not violate Sixth Amendment).

In Luis , unlike Caplin & Drysdale and Monsanto , the restraining order prevented the defendant from using her own un tainted funds to hire counsel. Luis , 136 S.Ct. at 1090 (plurality opinion). The government's interest in Luis's untainted funds was similar to that of an unsecured creditor, who "someday might collect from a debtor's general assets" but "cannot be said to have any present claim to, or interest in, the debtor's property." Id. at 1092. Citing Luis , Jones argues that the government now bears the burden to demonstrate at the outset that the assets it wants to restrain are tainted.

Jones may read Luis too expansively. Luis says nothing about timing or burden shifting. On the contrary, the government in that case conceded that the district court had restrained untainted funds. Id. at 1088. But even assuming without deciding that Jones's interpretation of Luis is correct, that case would have offered Jones at best an additional line of attack on the district court's restraining order. Under long-settled circuit law, the pretrial restraint of a defendant's assets "without affording the defendant an immediate, postrestraint, adversary hearing at which the government is required to prove the likelihood that the restrained assets are subject to forfeiture violates the due process clause to the extent that it actually impinges on the defendant's qualified sixth amendment right to counsel of choice." United States v. Moya – Gomez , 860 F.2d 706, 731 (7th Cir. 1988).¹ If the district court finds that the defendant has insufficient alternative assets with which to pay counsel, but the government fails to justify its retention of all the frozen assets, "then the court must order the release of funds in an amount necessary to pay reasonable attorneys' fees for counsel of sufficient skill and experience to handle the particular case." Id. at 730.

Assuming that Jones's life insurance policies were not tainted by his fraud, and assuming further that he genuinely needed those assets to retain counsel, we cannot understand why he failed to invoke his right to an immediate hearing under Moya – Gomez . Conversely, if the life insurance policies were tainted, or if Jones had sufficient alternative assets available to him, then Luis would not have strengthened his litigating position. Either way, we find no plain error.

In addition to a due process argument under Moya – Gomez , Jones could have presented a statutory argument based on the language of 21 U.S.C. § 853(e). The overwhelming majority of courts to consider the question have held that § 853(e)"conveys Congress's intent to authorize the restraint of tainted assets prior to trial, but not the restraint of substitute assets." United States v. Parrett , 530 F.3d 422, 431 (6th Cir. 2008) ; see also, e.g., United States v. Jarvis , 499 F.3d 1196, 1204 (10th Cir. 2007) ("[A]ll but one federal court of appeals to address the issue has determined the legislative silence regarding substitute property in § 853(e) precludes pre-conviction restraint of substitute property.").

Jones points out that the government's ex parte motion asserted there was probable cause to believe that his life insurance premiums and contributions "constitute or derived from proceeds obtained from the health care fraud, or represent a substitute asset , and are therefore subject to forfeiture." Jones also notes that the government cited In re Billman , 915 F.2d 916, 921 (4th Cir. 1990), which held that a similar forfeiture statute, 18 U.S.C. § 1963, authorizes pretrial restraint of substitute assets. But we have never held as much. No controlling precedent barred Jones from asking the district court to construe § 853(e) as applying only to tainted assets, an argument that at least one district court in this circuit has accepted. See United States v. Toran , No. 13–30072, 2015 WL 1968698, at *7 (C.D. Ill. May 1, 2015).

Thus, Jones could have advanced a constitutional argument, a statutory argument, or both in response to the restraining order. Any one of these approaches could have delivered the same relief he believes he might have obtained under Luis . Jones forfeited his challenge to the restraining order by failing to object in the district court, so we review that order only for plain error.

We find no plain error. Nothing in the record tends to show that the life insurance policies were not tainted by Jones's fraud. Further, it is unclear whether Jones even needed the life insurance policies to retain counsel.² A presentence investigation report...