Opinion
No. 20 CR 111-1
2022-03-28
UNITED STATES of America, Plaintiff, v. Vincent DEL GIUDICE, Defendant.
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.
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
Virginia M. Kendall, United States District Judge
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.
BACKGROUND
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) :
(i) $1,060,792 in cash seized from defendant's residence on or about April 15, 2019;
(ii) Gold coins (valued at $92,623) seized from defendant's residence;
(iii) Silver bars and jewelry (valued at $347,895) seized from defendant's residence;
(iv) A 2017 Lexus GX automobile;
(v) Defendant's primary residence in Orland Park, Illinois; and
(vi) a personal money judgment in the amount of $8,000,000.
(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).
LEGAL STANDARD
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) ("Forfeiture seeks to punish a defendant for his ill-gotten gains by transferring those gains ... to the United States Department of Justice.") (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).
DISCUSSION
I. Defense Witness John Iannarelli
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) ("Though an expert's opinion may be admissible, the admissibility of the expert's opinion does not equate with its utility ... The fact finder must still consider the credibility of the expert and determine the weight to be accorded to his or her testimony and report."). 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. 486:5-6; Tr. 532:22-533:5). In short, faced with evidence that the tax returns may not be the full picture of Del Giudice's gambling earnings, Iannarelli does little to provide alternate explanations that would comport with his ultimate theory that the tax returns are the most reliable indicator of Del Giudice's gambling proceeds.
Establishing the limited probative value of testimony from Del Giudice's witness, the Court now turns to whether the Government has proven its own proposed forfeiture proposal by a preponderance of the evidence.
Forfeiture Allegation One
A. Money Judgment
The Government proposes a total money judgment of $3,505,398. Del Giudice concedes that some money judgment is appropriate and necessary, but counter-proposes a money judgment of $1,282,950. (Dkt. 294 at 2). Money judgments representing unlawful proceeds are appropriate. See United States v. King , 231 F. Supp. 3d 872, 888 (W.D. Okla. 2017), citing United States v. McGinty , 610 F.3d 1242, 1246 (10th Cir. 2010). The calculation of forfeiture amounts should be a reasonable estimate but need not be precise. United States v. Friedman , 971 F.3d 700, 717 (7th Cir. 2020) (when calculating loss for sentencing, the court must conclude that it is more likely than not that amount in question is correct and a reasonable estimate suffices); United States v. Bogdanov , 863 F.3d 630, 633-34 (7th Cir. 2017) (the court must conclude that it is more likely than not that the amount in question is correct; for this purpose, a reasonable estimate suffices.)
In the Indictment, the Government sought a money judgment of $8,000,000. During closing arguments at the forfeiture hearing in this matter, the Government adjusted the money judgement it sought and now requests a money judgment of $3,505,398.
As discussed supra , the Court does not find the counterproposal advanced by Del Giudice through Iannarelli (based on reported income on tax returns) to be reasonable based on the weight of the evidence before it.
It is well established that Del Giudice was no novice to running an illegal gambling enterprise. For instance, Davis testified that the bookmaking operation run by Del Giudice was a very large operation with over 1,000 players. (Tr. 73: 14-18). Davis also provided expert testimony about how Del Giudice hid money or collected it in unconventional ways, which is consistent with his experience with illegal gambling enterprises. Based on the record and his experience with large gambling operations and industry statistics, Davis identified the estimated intake of Del Giudice's operations in 2018 as between approximately $81 million and $136 million. (Dkt. 293-1 at 20).
The Government, as a starting point for its proposed forfeiture calculations, relied on the numbers reported in the "Costa Rica Spreadsheet." (Tr. 56:6-17; Dkt. 293-1 at 10). This pdf document was recovered at Del Giudice's residence and reflected a total hold for 2018 of $8,172,690. (Id. ; see also Tr. 61:12-16). It is referred to as a Costa Rica Spreadsheet because Del Giudice outsourced his recordkeeping to a website operated out of Costa Rica called "UncleMickSports.com" and provided the "office" of the gambling enterprise. (Tr. 61:23—62:3). Del Giudice does not dispute this hold amount but does dispute the way the Government proceeded in its calculation from this point forward. (Dkt. 294 at 13; see also Tr. 490:20-21).
The next step in the Government's calculation is to identify the share of gambling proceeds that Del Giudice collected from the hold and what he split with his agents. The Government, at different points in the case, has suggested that collection figure was somewhere in the range of 40-50% based on intercepts and other records. (Tr. 89:23-90:8; Tr. 90:8-24; Tr. 187:7-12). In post-hearing briefing, the Government relies on a more conservative 37.5% figure (in Del Giudice's favor) based on a calculation in Iannarelli's report. (Dkt. 293 at 30; see also Dkt. 245-2 Iannarelli Expert Report, Appendix 1). This is a close and reasonable estimate to the original 40% identified by Davis. (Tr. 91:3-18). Taking the 37.5 percent figure, Del Giudice had an approximate share of $3,000,000 in 2018. Iannarelli's report identified $839,634 coming from Del Giudice's own office (as opposed to agents), leaving the total amount collected from agents as approximately $2,160,000 in 2018.
Iannarelli offered in his testimony to have only included this 37.5% collection figure in his report to show he could not generate a collection figure from the Costa Rica spreadsheet (Tr. 402, Dkt. 294 at 41), a clarification that does not appear in his report. Defendant also argues that the figure was only to show how far off the Government was from Iannarelli's calculation, but the Government's low estimate was only 2.5% different than the estimate in his report. In any event, Iannarelli has no FBI experience with gambling operations, compared with the extensive experience Davis has as an FBI forensic examiner. It is not fatal to the Government's position if Davis was able to calculate a reasonable estimate of a collection figure and Iannarelli was (as he testified contrary to his report) unable to do so.
Beyond the Costa Rica spreadsheet, intercepted phone calls, and the expertise of the Government's witnesses, the key piece of evidence the Government relies upon to bolster the viability of this calculation is the Christmas give back evidence. (Tr. 67:12—72:5; Dkt. 293-1 at 11; Tr. 104:14-17). There is evidence of Christmas bonuses paid out by Del Giudice for 2017 and 2018, but not 2016. (Tr. 104:21-23). The give-backs (and related intercepts discussing the give-backs) reflect that Del Giudice, at Christmas, gave his agents back 10% of what he made with them for the year. (Tr. 65:20; Tr. 224:5-8; Tr. 524:6-11). In 2018, the approximate give-back totaled $116,929—which is 10% of approximately $1,169,000. Taking out the money returned as givebacks leaves the Government with approximately $1,080,000 in proceeds for 2018—a 50% collection rate based on the $2,160,000 number already calculated. The Christmas give-back in 2017 was $111,619. The Government uses the give backs for 2017 and 2018 to extrapolate to 2016 an average give back that would have been $114,274. (Dkt. 273-1 at 71).
The Government uses this evidence to calculate a total money judgment for this forfeiture allegation, which must be reasonable but not exact. See United States v. Friedman , 971 F.3d 700, 717 (7th Cir. 2020). Using the Costa Rica Spreadsheet starting point, along with the Christmas 10% give back and moving outward, the Government proposes that Del Giudice collected at least $1,142,740 in 2016; $1,116,190 in 2017; and $1,169,920 in 2018. The Government also uses the 50% collection rate it calculated using the Christmas give-backs for 2018 to assume a 50% collection on the $840,000 from Del Giudice's own bettors ($420,000). (Dkt. 293 at 31). Less the 10% give-back, this leaves a forfeiture amount, by year, of: $1,028,466 (2016); $1,004,571 (2017); and $1,472,361 (2018). (Dkt. 293-1 at 71). This totals $3,505,398.
Defendant objects to the Government's proposed money judgment as impermissible extrapolation from 2018 to the earlier years of 2016 and 2017. (Dkt. 294 at 3-4, 25-27). "Extrapolation is necessary, and permitted by forfeiture law, in the absence of records that would directly provide, for the relevant time periods, the information necessary to enable the court to do the arithmetic." United States v. King , 231 F. Supp. 3d 872, 915 (W.D. Okla. 2017). To extrapolate, however, there must be adequate evidence (measured by a preponderance of the evidence) that the beginning point is reliable enough to lead to the proposed end point without unacceptable speculation and conjecture. Id. at 915 ; see also United States v. Basciano , 2007 WL 29439, at *2 (E.D.N.Y. Jan. 4, 2007) (total amount of forfeited assets may be determined by "conservatively estimating" the revenue regularly collected or received, but evidence of such revenue may not be overly speculative).
Calculating the correct criminal forfeiture amount is a highly fact-specific matter. For each of the issues that can arise with extrapolation identified in King , the Government is this case has not run afoul. For example, the government in King extrapolated based on assumptions negated by the government's evidence or other uncontroverted evidence. That is not the case here. The hold amount on the Costa Rica spreadsheet is uncontested, and the 10% Christmas give backs are not convincingly negated by other evidence. The assumption of similarity between the years 2016-2018 are also not unsupported by the evidence—particularly because there is evidence that Del Giudice viewed 2018 as a bad year for the enterprise. Any extrapolation to 2017 and 2016 based on 2018 collection thus works in Del Giudice's favor. The extrapolation is also somewhat limited–there are Christmas give-back sheets for both 2017 and 2018, and the Costa Rica Spreadsheet for 2018. This is different than King , where the court did not want to allow extrapolation from 24 months (2 years) to 108 months (9 years). The extrapolation required in this case is much more limited.
In view of the record in this case, the Court finds that the Government's extrapolation is warranted. Defendant is correct that the burden of proof in forfeiture proceedings entails more than just proving a generalized factual concept more probably true than not. (Dkt. 294 at 21, citing King, 231 F. Supp. 3d at 969 ). The evidence here supports (by a preponderance of the evidence) a $3,505,398 money judgment for the time period charged in the Indictment.
The Court now turns to the individual assets the Government contends are subject to forfeiture. The Government moves, and the Court agrees, that these assets (to the extent eligible for forfeiture as discussed infra ) be deducted from (and not in addition to) the full money judgment. (Dkt. 293 at 32).
B. Individual Assets Subject to Forfeiture
The Government also seeks forfeiture of specific property on statutory grounds: $1,060,792 in cash; $89,640 used to pay for the mortgage on Del Giudice's residence; gold, silver, and jewelry recovered in a search of Del Giudice's residence; and a 2017 Lexus automobile.
1. $1,060,792 cash recovered from residence
A search warrant executed April 15, 2019, for Del Giudice's residence resulted in the recovery of $1,060,792 in cash. (Tr. 203:11-12; see also Indictment Forfeiture Allegation One at 2(a)(i)). The Government seeks forfeiture of these recovered funds as gambling proceeds, an instrumentality of the offense, and a substitute asset. (Dkt. 293 at 32).
It is not clear whether Del Giudice contests the classification of these funds as gambling proceeds, or only objects to the cash being "separately forfeitable" beyond the money judgment. The Government seeks to subtract the cash seized from the total money judgment (Dkt. 293 at 32; see also Tr. 579-580).
First, funds are forfeitable if they "constitute[ ] or [are] derived from proceeds of any offense constituting specified unlawful activity as defined in section 1956(c)(7)(A) or a conspiracy to commit such offense." The cash recovered was found in the immediate vicinity to two cash counting machines (Tr. 207:1-8), and the record supports that co-defendant Eugene Del Giudice would collect and bring gambling proceeds to the residence. (Tr. 83:14-21; Tr. 222-223). In addition, the search warrant was executed in mid-April, following two significant sporting events—the Super Bowl and the NCAA March Madness tournament. (Tr. 243-244). Davis offered several reasons why Del Giudice would keep gambling proceeds in his residence based on his experience with illegal bookmaking operations, including needing the ability to pay winning gamblers (Tr. 75-76; Tr. 205) and keeping the cash in the residence to avoid triggering Suspicious Activity Reports (SARs) and/or Currency Transaction Reports (CTRs).
Second, the Government seeks forfeiture of these funds as an instrumentality of Del Giudice's illegal gambling enterprise. Del Giudice construes this cash as "merely kept" at his residence. (Dkt. 294 at 33). But the Government presented evidence that this cash was an instrumentality of Del Giudice's illegal gambling enterprise because it could be used to pay winners and manage other gambling-related expenses without raising suspicion or generating CTRs/STRs at financial institutions. Therefore, the $1,060,792 seized is also forfeitable as an instrumentality of the enterprise. See United States v. Tencer, 107 F.3d 1120, 1134 (5th Cir. 1997) ("Facilitation occurs when the property makes the prohibited conduct ‘less difficult or more or less free from obstruction or hinderance.")
Third, the Government argues the cash—if not proceeds or an instrumentality—is also a substitute asset appropriate for forfeiture. Although the Court finds this cash should be considered both proceeds and instrumentality, it is forfeitable for the additional reason that it is a substitute asset pursuant to 21 U.S.C 853(p). Del Giudice appears not to contest this. (Dkt. 294 at 32) ("[Del Giudice] has not argued that these funds would not be available to satisfy a personal money judgment in this case.") 2. $89,640 invested in residence
In the Indictment and at to the forfeiture hearing, the Government sought forfeiture of real estate at 15708 Shire Drive, Orland Park, Illinois (Dkt. 1 at Forfeiture Allegation One, 2(b); see also Forfeiture Hearing Transcript at 29:4-6). In its post-hearing briefing, the Government accepts that the house is titled in the name of Lisa Del Giudice and her father, neither of whom is a defendant in this case, and as such their interest in the home cannot be extinguished through this criminal proceeding. (Dkt. 293 at 35). The Government still seeks forfeiture of funds invested in the house by Del Giudice as proceeds of the gambling enterprise. (Id. )
The Government argued at the forfeiture hearing that Del Giudice's residence was the center of his gambling operations: the place where he stored and accepted payments of gambling debts, entertained agents and gamblers, and communicated with agents on settle-up sheets. The residence contained the only gambling records outside of Costa Rica, and the Christmas bonus sheets were recovered from the residence. (Dkt. 293-1 at 72). However, in post-trial briefing the Government abandons this argument and only seeks forfeiture of the approximately $90,000 that it argues are gambling proceeds Del Giudice invested in the residence.
This late-stage pivot leaves it difficult to ascertain the Government's position on these alleged proceeds. The Defendant argues that if the $90,000 in mortgage payments are "gambling proceeds," those funds are already accounted for in the money judgment and an additional $89,640 would be impermissible double counting of the same funds. The Government appears to be subtracting the $89,640 from the money judgment. In any event, the Government has not presented sufficient evidence to establish that the mortgage payments were made using gambling proceeds. Agent Smith testified he did not know where the mortgage payments came from, and while the use of cashier checks may weigh towards suspicious of illegal activity, the use of cashier checks standing alone is not sufficient evidence to prove by a preponderance of the evidence that the funds were proceeds of gambling. The Government's forfeiture request of $89,640 in mortgage payments on Del Giudice's residence is denied.
3. Gold, Silver, and Jewelry
In addition to the cash recovered during the execution of the April 15, 2019, search warrant (see supra II.B.1), agents also discovered gold, silver, and jewelry at Del Giudice's residence. (See generally Dkt. 276, Tr. at 203-204). Agent Smith testified that recovery included silver bars and jewelry valued at $347,895 (Tr. 219:6-8) and gold coins valued at $92,623 (Tr. 219:9-10).
The Government seeks forfeiture of this property as substitute assets. The Government may seek an order for substitute assets in a preliminary order of forfeiture along with an order for money judgment and directly forfeitable property. See Fed. R. Crim. P. 32.2(b)(2). Title 21, United States Code, Section 853(p) (1)(A), (C) and (E) permit the Court to order the forfeiture of any other property of the defendant to satisfy a forfeiture judgment where property cannot be located upon the exercise of due diligence, has been placed beyond the jurisdiction of the Court, or has been commingled with other property which cannot be divided without difficulty. See Young v. United States , 489 F.3d 313, 316 (7th Cir. 2007) ("[W]ith criminal forfeiture the government is always free to pursue substitute assets.")
As the defense points out, the Government argued during the forfeiture hearing that the gold, silver, and jewelry could also be proceeds or instrumentalities of the illegal gambling enterprise. (Dkt. 294 at 33; see also Tr. 29:1-8). The Government backs off this position in its post-hearing brief and contends only that this property should be considered substitute assets. Therefore, the Court does not reach the question of whether this property is in fact proceeds or instrumentalities.
Del Giudice ran a successful gambling operation for decades and was practiced both at hiding assets and collecting his gambling proceeds in unconventional, non-monetary methods. Del Giudice's own insistence (through his expert) that he collected only the money he paid taxes on—despite evidence to the contrary—further supports a finding that the Government may not otherwise be able to recoup the money judgment absent an order for substitute assets. The gold, silver, and jewelry seized on April 15, 2019, is hereby ordered forfeited as substitute assets in order to satisfy the money judgment entered by the Court pursuant to 21 U.S.C. 853(p).
4. 2017 Lexus
The Government also seeks forfeiture of a 2017 Lexus SUV as an instrumentality of the gambling enterprise subject to forfeiture. (Dkt. 293 at 37; see also 18 U.S.C. Section 1955(d) ). Although property need not be exclusively used for illegal activities to be forfeitable, it must have more than an incidental or fortuitous connection to the criminal activity. See 18 U.S.C. Section 982(a)(1) ; see also United States v. Seher , 562 F.3d 1344, 1370 (11th Cir. 2009), United States v. Parcel of Property, 337 F.3d 225, 233 (2d Cir. 2003).
To prove a nexus that is more than fortuitous or incidental, the Government points to Del Giudice's use of the Lexus on two occasions. On the first occasion, Del Giudice used the vehicle in December 2018 to drive to Oak Brook, Illinois to meet an agent and collect several thousand dollars in gambling proceeds. (Tr. 240:15-19). Agent Smith conducted surveillance of that meeting and observed Del Giudice arriving in the vehicle, exiting the vehicle, and entering the same location as a bookmaking agent. At the location, the agent was observed passing an envelope to another agent, who then delivered it to Del Giudice. (Tr. 240:20 – 241:25). Agent Smith also surveilled Del Giudice on February 12, 2019. On that date, Agent Smith observed Del Giudice arrive at a location and meet with an agent. (Tr. 242-244, Tr. 379-381). At the February meeting, no money was observed changing hands. (Tr. 381). At the February meeting, the agent Del Giudice met with was someone known to be a friend to Del Giudice. (Tr. 381). These are the only two occasions presented by the Government to support its forfeiture allegation as to the 2017 Lexus.
These two occasions do not establish a sufficient nexus between the vehicle and Del Giudice's illegal enterprise that was more than incidental or fortuitous. Instead, the evidence suggests only a transitory and tangential relation to the offense—that Del Giudice borrowed his wife's car on two occasions, including one where no money was seen changing hands. This does not justify forfeiture of the vehicle under Section 982(a)(1). The Government has not proven by a preponderance of the evidence that use of the 2017 Lexus was more than incidental, and the property is thus not subject to forfeiture in this action.
II. Forfeiture Allegation Two
The second forfeiture allegation in the Indictment is made pursuant to 18 U.S.C. Section 982(a)(1). The Government submits that Del Giudice express-mailed at least $113,625 in cashier's checks to the offshore company that handled the logistics for his gambling enterprise in violation of Title 18, United States Code, Section 1956, and 1956 (h) and this money is thus subject to forfeiture. Under Section 982(a)(1), district courts "shall order" forfeiture for defendants convicted of money laundering. The Supreme Court "has made clear that when Congress provides that a district court ‘shall order’ forfeiture, it ‘could not have chosen stronger words to express its intent that forfeiture be mandatory.’ " United States v. Waked Hatum , 969 F.3d 1156, 1162 (11th Cir. 2020) (citing United States v. Monsanto , 491 U.S. 600, 607, 109 S. Ct. 2657, 2662, 105 L.Ed.2d 512 (1989).) Property subject to forfeiture includes the money or the property which was actually laundered. Id.
The Government has established sufficient facts to prove by a preponderance of the evidence that Del Giudice did in fact express-mail $113,625 such that this money should be subject to forfeiture. Del Giudice has pled guilty to Count III of the Indictment and admitted in his plea agreement that he "express-mailed $113,625 from Orland Park, Illinois to Company A in Costa Rica from in or around March 29, 2018 and in or around March 2019 to pay for the bookkeeping, accounting and website management services provided by Company A, all of which promoted the continued operation of the illegal gambling business." (Dkt. 136 at 4). The evidence proffered at the forfeiture hearing supports this admission. Agent Smith testified that the FBI recovered a series of photos of cashier's checks and FedEx shipment records that showed Del Giudice was shipping cashier's checks from the United States to Costa Rica to pay for a bookkeeping service there. (Tr. 224:12-17). Checks were made out to shell corporations Pragma Consulting, Corvus Consulting, and Global Marketing Consulting. (Id. at 224:18-22). Those cashier checks added up to $113,625. covering a time period of 2016 to 2018 (Id. at 225:1-5; Tr. 302:3-6).
Del Giudice offers no argument that the government has not met its burden with respect to these funds. However, Del Giudice argues that forfeiture of this money would constitute impermissible double recovery. (Dkt. 294 at 6-7). Del Giudice's theory is that the laundered money sent to the offshore company in Costa Rica is proceeds of gambling such that it is already being collected as part of forfeiture allegation one, discussed supra , and thus cannot be collected here again. Defendant's only support for this theory comes from the United States Department of Justice Manual, which finds that in the context of a RICO offense it is "improper to forfeit more than the total value of defendant's unlawfully-obtained proceeds. For example, if the defendant obtains proceeds from an offense, he may be made to forfeit the total value of those proceeds or ordered to forfeit property traceable to those proceeds, but he cannot be ordered to forfeit the sum of both." 8 Department of Justice Manual §§ 9-110.000C, Criminal Rico 18 U.S.C. § 1961 - 1968 ; A Manual For Federal Prosecutors (United States Department of Justice, 6th rev. ed., May, 2016). Del Giudice cited the DOJ Manual correctly but not fully. The DOJ Manual goes on to state that "if the defendant is found liable to pay a money judgment under two separate forfeiture theories in the same case, but the judgment relates to the same monies – e.g., the proceeds of a RICO offense and the property "involved in" the laundering of the RICO proceeds under 18 U.S.C. § 982 (the money-laundering forfeiture statute) – the judgments are concurrent." Id. ; see also, e.g., United States v. Brown , 2006 WL 898043, at *4 (E.D.N.Y. 2006). The Government has sought forfeiture of both the proceeds of illegal gambling and money laundering—two separate forfeiture allegations and theories of recovery—and can therefore recover both.
Providing no other legal support for the applicability of his double-recovery theory, and because the Government has proved by a preponderance of the evidence that money was paid in violation of 18 U.S.C. Sections 1956 and 1956 (h), $113,625 is subject to forfeiture.
CONCLUSION
For the reasons given, it is hereby ordered that an order of preliminary forfeiture be entered in favor of the United States against Defendant Vincent Del Giudice pursuant to Rule 32.2(b) of the Federal Rules of Criminal Procedure.
A money judgment of $3,505,398 shall be entered against Defendant Vincent Del Giudice. The following property shall also be forfeited:
(1) $1,060,792 seized from Del Giudice's residence on April 15, 2019;
(2) Silver bars and jewelry seized from Del Giudice's residence valued at $347,895;
(3) Gold coins seized from Del Giudice's residence valued at $92,623.
The value of specific property items (1) – (3) shall be counted in satisfaction of the $3,505,398 money judgment.
An additional money judgment pursuant to money laundering statute shall be entered in the amount of $113,625 pursuant to 18 U.S.C. Section 982(a)(1) and 18 U.S.C. Sections 1956 and 1956 (h).
Upon entry of this Order, the United States is authorized to commence any applicable proceeding to comply with statutes governing third-party rights, including giving notice of this Order. The United States shall publish notice of the order and its intent to dispose of the property in such a manner as the United States may direct. The United States may also, to the extent practicable, provide written notice to any person known to have an alleged interest in the subject property.
Any person, other than the above-named defendant, asserting a legal interest in the subject property may, within thirty (30) days of the final publication of notice or receipt of notice, whichever is earlier, petition the court for a hearing without a jury to adjudicate the validity of his alleged interest in the subject property, and for an amendment of the order of forfeiture.
Pursuant to 32.2(b)(3) of the Federal Rules of Criminal Procedure, this Preliminary Order of Forfeiture shall become final as to the Defendant at the time of his sentencing, and shall be made part of the sentence and included in the judgment. If no third party files a timely claim, this Order shall become the Final Order of Forfeiture, as provided by Rule 32.2(c)(2).
Any petition filed by a third party asserting an interest in the subject property shall be signed by the petitioner under penalty of perjury and shall set forth the nature and extent of the petitioner's right, title, or interest in the subject property, the time and circumstances of the petitioner's acquisition of the right, title or interest in the subject property, any additional facts supporting the petitioner's claim, and the relief sought.
The United States shall have clear title to the subject property following the Court's disposition of all third-party interests, or, if none, following the expiration of the period provided by statute for the filing of third-party petitions.
This Court shall retain jurisdiction to take such additional action and enter such further orders as may be necessary to implement and enforce this preliminary forfeiture order.