United States v. King

• Decision Date: 06 March 2017
• Docket Number: Case No. CR–13–0063–F
• Citation: 231 F.Supp.3d 872
• Parties: UNITED STATES of America, Plaintiff, v. (1) Bartice A. "Luke" KING, (8) Kory Elwin Koralewski, (24) Paul Francis Tucker, (27) Leon Mark Moran, (29) Luis Robles, (52) Zapt Electrical Sales, Inc., (58) Rodger Vanpelt Bramley and (59) Kelley Ward Diebner, Defendants.
• Court: U.S. District Court — Western District of Oklahoma

231 F.Supp.3d 872

UNITED STATES of America, Plaintiff,

v.(1) Bartice A. "Luke" KING, (8) Kory Elwin Koralewski, (24) Paul Francis Tucker, (27) Leon Mark Moran, (29) Luis Robles, (52) Zapt Electrical Sales, Inc., (58) Rodger Vanpelt Bramley and (59) Kelley Ward Diebner, Defendants.

Case No. CR–13–0063–F

United States District Court, W.D. Oklahoma.

Signed March 6, 2017

Travis D. Smith, John S. Han, Robert Don Evans, Jr., Scott E. Williams, Wilson D. McGarry, US Attorney's Office, Oklahoma City, OK, Robin L. Sommer, US Attorney's Office, Wichita, KS, for Plaintiff.

Nathan J. Mays, The Law Offices of Nathan J. Mays PC, Dan B. Gerson, Houston, TX, John D. Cline, Law Office of John D. Cline, Anthony J. Brass, Law Office of Anthony Brass, San Francisco, CA, Robert M. Goldstein, Law Office of Robert Goldstein, Boston, MA, Daniel Brodersen, Brodersen Law Firm, Orlando, FL, Juan Chardiet, Juan Chardiet Attorney at Law, McLean, VA, Craig D. Corgan, Craig Corgan Attorney at Law, Yukon, OK, James D. Henderson, The Law Office of James D. Henderson, Jr., Santa Monica, CA, Michael W. Noland, Noland Defense Firm, Joseph G. Shannonhouse, IV, Shannonhouse Law Offices PLLC, Derek H. Ross, Robert G. McCampbell, Fellers Snider Blankenship Bailey & Tippens, Michael D. McBride, McBride Law Firm, Seth A. Day, Susanna M. Gattoni, Hall Estill, Ronald L. Wallace, The Wallace Law Firm, Andre B. Caldwell, Anthony J. Hendricks, Crowe & Dunlevy, Matthew C. Kane, Ryan Whaley Coldiron Shandy PC, J. Patrick Quillian, J. Patrick Quillian PC, Robert L. Johnston, Law Office of Robert L. Johnston, Lance B. Phillips, Lance B Phillips PC, Paul A. Lacy, Federal Public Defender, Michael S. Johnson, Law Office of Michael S. Johnson, Troy R. Cowin, Lopez Johnson Armenta, David B. Autry, Robert S. Jackson, Perry W. Hudson, Oklahoma City, OK, Alain J. Ifrah, David S. Yellin, Ifrah PLLC, Washington, DC, Ronald Eugene Jenkins, Jenkins & Kling PC, St. Louis, MO, H. Manuel Hernandez, H. Manuel Hernandez PA, Longwood, FL, Michael W. Nielsen, Nielsen Law Firm, Winter Springs, FL, Gordon D. Jones, Jones & Hawley PC, Birmingham, AL, Jerry W. Biesel, Dallas, TX, Steve T. Jumes, Varghese Summersett & Smith, Fort Worth, TX, for Defendants.

MEMORANDUM OPINION AND ORDER re: FORFEITURE

STEPHEN P. FRIOT, UNITED STATES DISTRICT JUDGE

Table of Contents

I. Introduction...881

A.The CriminalCharges...882

B.The Trials and Convictions...883

C.The Moving Papers and EvidentiaryHearing...884

II.Authority for Forfeiture...886

A.Forfeiture Procedures...886

B.GeneralPrinciples...887

C.Forfeitures Based on RICO ConspiracyConvictions...891

D.Forfeitures Based on Convictions for Operation of Illegal GamblingBusiness...894

E.Forfeitures Based on Money Laundering ConspiracyConvictions...895

F.Forfeiture Based on a FacilitationTheory...897

III.The Excessive FinesClause...899

IV.Burden of Proof...905

A.The Government'sBurden...905

B.The Defendants'Burden...907

V.The ExclusionaryRule...908

VI.Tracing, Tainting, Commingling and Extrapolation...910

A.Tracing, Tainting and Commingling...910

B. Extrapolation...915

VII.Notice of the Government's Intent to Seek MoneyJudgment...916

VIII.Overview of the Government's ForfeitureCase...917

A.The Government's Forfeiture Brief (doc. no. 1999)...917

1. King...918

2. Koralewski...919

3. Tucker...919

4. Moran...920

5. Robles...920

6. Bramley...920

7. Diebner...920

B.The Government's Presentation at the ForfeitureTrial...920

IX.Findings of Fact...922

A. Introduction...922

B.Viability of the Government's Characterization of Funds AllegedlyLaundered...924

1.PreliminaryMatters...9242.Sources of Deposits and Nature of Activities Generating the Funds...927

3.Money LaunderingTotal...948

4.A BriefDigression...949

C.Viability of the Government's Proposed Direct Attributions and Extrapolations...951

1.General Nature of the Government's Proposed Direct Attributions and Extrapolations...951

2.Extrapolation Based on Legendz Payouts to Bettors through Global Data PaymentServices...954

3.The Government's Proposed Extrapolations and Direct Attributions re: Proceeds Attributable to Individual Agents and Runners...955

a. TerryCampbell...955

b. RalphHernandez...957

c. KellyDiebner...960

d. ChristopherTanner...965

e. MichaelLawhorn...966

f. JosephBarry...970

g. PaulTucker...970

h. BruceMiddlebrook...972

i. RodgerBramley...974

j. PaulWilson...976

k. LeonMoran...977

l. JosephMcFadden...981

m. DavidRoss...983

n. KoryKoralewski...983

o. LuisRobles...993

4.Conclusion as to the Government's Proposed Extrapolations and DirectAttributions...994

D.Viability of the Government's Contention that all Forfeiture Defendants, Regardless of their Respective Degrees of Participation in the Legendz Enterprise, Should be Subjected to a Forfeiture Money Judgment in the SameAmount...995

E.Findings Specific to King...996

1.Forfeiture of SpecificAssets...996

2.Forfeiture MoneyJudgment...999

F.Findings Specific to Koralewski...999

1.Forfeiture of SpecificAssets...999

2.Forfeiture MoneyJudgment...1001

G.Findings Specific to Tucker...1001

1.Forfeiture of SpecificAssets...1001

2.Forfeiture MoneyJudgment...1001

H.Findings Specific to Moran...1006

1.Forfeiture of SpecificAssets...1006

2.Forfeiture MoneyJudgment...1006

I.Findings Specific to Robles...1008

1.Forfeiture of SpecificAssets...1008

2.Forfeiture MoneyJudgment...1008

J.Findings Specific to Bramley...1009

1.Forfeiture of SpecificAssets...1009

2.Forfeiture MoneyJudgment...1012

K.Findings Specific to Dieber...1013

1.Forfeiture of SpecificAssets...1013

2.Forfeiture MoneyJudgment...1013

L.Summary of Forfeiture–RelatedFindings...1014

X. Forfeiture–Related Sanctions Against the UnitedStates...1015

XI. Conclusion...1022

I.Introduction

The government moves for preliminary orders of forfeiture against the defendants Bartice A. "Luke" King,¹Kory Elwin Koralewski, Paul Francis Tucker, Leon Mark Moran, Luis Robles, Zapt Electrical Sales Inc., Rodger Vanpelt Bramley and Kelley Ward Diebner.This order refers to these parties, other than Zapt,² as "the forfeiture defendants."³

The government seeks forfeiture of specific assets as well as a forfeiture money judgment.See generally, Rule 32.2(b), Fed.R.Crim.P.(procedures for entering a preliminary order of forfeiture).As for the forfeiture money judgment, the government now seeks a judgment in the amount of $231,432,686.73 against the forfeiture defendants.(In the last of the four jury trials that were held in this case, an FBI witness maintained, repeatedly, that the government actually seeks $1 billion by way of forfeiture.Oct. Tr. 2074, 2077, 2114–14.⁴ )

These forfeiture proceedings are, to put it mildly, contested.

The findings of fact in this order are based on the evidence presented at the four jury trials which were held in this case, as well as the James hearings and the nonjury trial which was addressed exclusively to forfeiture issues—all of which generated 11,368 pages of trial transcript.

A.The Criminal Charges

The original Indictment in this case was returned on March 20, 2013.It alleged a ten-year conspiracy period for the two conspiracy counts.Doc. no. 1, at 18, 47.⁵As of the date of the Indictment, there was about a nine-year overlap between the ten-year duration of the conspiracy and the duration of the government's investigation of that conspiracy.

The original Indictment charged fifty-seven defendants, including six of the eight forfeiture defendants now before the court(King, Koralewski, Moran, Robles, Tucker and Zapt).Doc. no. 1.The Indictment charged: Count 1, a racketeering (RICO) conspiracy in violation of 18 U.S.C. § 1962(d); Count 2, operation of an illegal gambling business in violation of 18 U.S.C. § 1955; and Count 3, conspiring in violation of 18 U.S.C. § 1956(h) to commit money laundering under 18 U.S.C. §§ 1956and1957.The Indictment included forfeiture allegations stating the government's intent to seek criminal forfeiture of at least $1,000,000,000.00 as well as specific items of real and personal property.

On August 16, 2013, the United States filed a Bill of Particulars for Forfeiture of Property, giving notice to defendants King, Tucker and Moran (and other defendants not involved in these forfeiture proceedings), that the United States was seeking forfeiture of additional specific property listed in the Bill of Particulars.Doc. no. 346.

On August 21, 2013, a grand jury sitting in the Western District of Oklahoma returned a Superseding Indictment against fifty-nine defendants, including the eight forfeiture defendants before the court in these proceedings (King, Koralewski, Tucker, Moran, Robles, Zapt, Bramley and Diebner).Doc. no. 354.The Superseding Indictment included modified versions of the same three counts.The Superseding Indictment included forfeiture allegations stating the government's intent to seek criminal forfeiture of at least $1,000,000,000.00 and specific items of real and personal property.Each of the forfeiture defendants was convicted, by a jury, on one or more of the three counts.

On October 15, 2013, a Second Bill of Particulars for Forfeiture of Property was filed providing notice (to the extent material here) to King, Bramley and Diebner of the government's intent to pursue forfeiture of additional items of real and personal property.Doc. no. 465.

B.The Trials and Convictions

The sheer number of defendants necessitated multiple trials.Accordingly, the forfeiture defendants, along with other defendants, were grouped in four sets of defendants to be tried together in four separate trials.All of the defendants who have been tried have agreed to have forfeiture determined by the court rather than by a jury.

The first trial began on February 12, 2015, and a jury verdict was returned on March 3, 2015.Forfeiture defendants Tucker, Robles and Zapt were tried in this first set of defendants.Tucker was found guilty on all three counts.Robles was found guilty on all three counts.Zapt was not a defendant with respect to Count...