United States v. Kim

• Decision Date: 10 August 2021
• Docket Number: CRIMINAL 4:20cr47 (DJN)
• Court: U.S. District Court — Eastern District of Virginia
• Parties: UNITED STATES OF AMERICA, v. IRIS KIM, et al., Defendants.

UNITED STATES OF AMERICA,
v.
IRIS KIM, et al., Defendants.

CRIMINAL No. 4:20cr47 (DJN)

United States District Court, E.D. Virginia, Newport News Division

August 10, 2021

MEMORANDUM OPINION (GRANTING IN PART AND DENYING IN PART MOTION FOR PRELIMINARY ORDER OF FORFEITURE)

David J. Novak, United States District Judge.

This matter comes before the Court on the Government's Motion for a Preliminary Order of Forfeiture (ECF No. 175). In its Motion, the Government seeks money judgments from all Defendants, as well as the forfeiture of certain specific property as to Defendant Beyung Kim. Specifically, the Government seeks a joint and several money judgment from Defendants Iris Kim, Inc. (“I-Tek”) and Beyung Kim in the amount of $5, 188, 263.35, which the Government contends represents the entire “proceeds” of the conspiracy in Count One. The Government also seeks $109, 074 from Seung Kim, $1, 416, 385 from Park, $736, 464 from You and $439, 697 from Pak, which the Government contends represents the amount that these individuals personally obtained as a result of the offense in Count One. The Government asks that each of these Defendants be held jointly and severally liable with Defendants I-Tek and Beyung Kim for these amounts. Finally, the Government seeks forfeiture from Beyung Kim of a Mercedes-Benz E400 with VIN # WDDKK6FF2GH346128, real property and improvements located at 55 Ferguson Cove, Newport News, Virginia, (“Ferguson Cove Property”) and real property and improvements located at 2210 Executive Drive, Suite D, Hampton, Virginia, (“Executive Drive Property”). The Government contends that the Mercedes-Benz constitutes proceeds of the conspiracy and the real property constitutes forfeitable substitute assets.

For the reasons set forth below, the Government's Motion (ECF No. 175) is hereby GRANTED IN PART and DENIED IN PART. Specifically, the Court GRANTS the Government's Motion as it pertains to the money judgments sought from Beyung Kim and I-Tek and the property sought from Beyung Kim. However, the Court DENIES the Government's Motion as it pertains to the money judgments sought from the remaining Defendants. Specifically, the Court FINDS that the Government has failed to show that all of the payments . that Defendants Seung Kim, Park, Pak and You received from the years 2012 to 2018 are traceable to proceeds of their crime. Because only 33.56% of I-Tek's total income was derived from the relevant contracts during these years, the Court further FINDS that only 33.56% of these Defendants' total compensation is traceable to proceeds of their crime and, therefore, forfeitable. Therefore, the Court ORDERS that Defendant Seung Kim shall forfeit $36, 605.23, Pak shall forfeit $147, 562.31, Park shall forfeit $475, 338.81 and You shall forfeit $247, 157.32 with each Defendant to be held jointly and severally liable with Defendants I-Tek and Beyung Kim for these amounts.

I. ANALYSIS

A. Statutes Authorizing Forfeiture

All Defendants pled guilty to Count One of the Indictment (ECF No. 1), Conspiracy to Defraud and to Commit Offenses Against the United States, in violation of 18 U.S.C. § 371. As detailed in the Indictment, Defendants' conspiracy involved an agreement to commit (1) wire fraud, in violation of 18 U.S.C. § 1343; (2) mail fraud, in violation of 18 U.S.C. § 1341; (3) importing merchandise through false statements, in violation of 18 U.S.C. § 542; and, (4) smuggling, in violation of 18 U.S.C. § 545. Defendants I-Tek and Beyung Kim also pled guilty to a substantive violation of 18 U.S.C. § 542 in Count Twenty-Six.

Based on these guilty pleas, the Government seeks forfeiture under a number of statutes that they describe as interlocking: 18 U.S.C. § 981 (the civil forfeiture statute), 18 U.S.C. § 982 (the criminal forfeiture statute), 21 U.S.C.§853 (establishing the procedures for drug forfeitures) and 28 U.S.C. § 2461(c) (applying the procedures set forth in § 853 to all criminal forfeitures). In so doing, the Government misunderstands the interplay of these statutes and ignores the Fourth Circuit's finding in United States v. Chittenden, 896 F.3d 633 (4th Cir. 2018).

In Chittenden, the district court ordered criminal forfeiture based on the defendant's convictions for bank and mail fraud. Id. at 635-36. The district court's order cited to both the civil and criminal forfeiture statutes, the same statutes that the Government offers here in support of its forfeiture motion. Id. at 635 n. 2. In discussing the district court's order, the Fourth Circuit found 18 U.S.C. § 981 and 28 U.S.C. § 2461(c) inapplicable, stating that “§ 2461, and by extension § 981, does not apply when a criminal forfeiture provision applies to the crime charged.” Id. Because forfeiture was available under § 982 (the criminal forfeiture statute), “18 U.S.C. § 982(a)(2), not 28 U.S.C. § 2461 and 18 U.S.C. § 981, served as the basis for the district court's forfeiture order.” Id.

In other words, the Fourth Circuit has directed that a trial court must utilize the criminal forfeiture statute (§ 982) to address forfeiture following a conviction, unless this statute does not apply to the conviction for which forfeiture is sought. Only if § 982 does not apply to the crime of conviction may a trial court turn to 28 U.S.C. § 2461 and 18 U.S.C. § 981 to authorize forfeiture. Consequently, the Government's efforts to “mix and match” these various statutes to suit their needs here would violate the Fourth Circuit's command in Chittenden, because if § 982 applies to Defendants' convictions for Count One, then § 981 has no relevance.

The Court must therefore answer whether 18 U.S.C. § 982 applies to Defendants' convictions. That answer is clearly yes. Section 982(a)(2)(B) provides in relevant parts:

The court, in imposing sentence on a person convicted of a violation of, or a conspiracy to violate - section ... 542, 545 ... of this title, shall order that the person forfeit to the United States any property constituting, or derived from, proceeds the person obtained directly or indirectly, as a result of such violation

18 U.S.C. § 982(a)(2)(B) (emphasis added).^[1]

Thus, there can be no question that § 982(a)(2) applies, as all Defendants admitted in their Statement of Facts to violating sections 542 and 545 as part of the conspiracy alleged in Count One. (I-Tek SOF (ECF No. 96) at 3; B. Kim SOF...