MEMORANDUM OF LAW filed by Plaintiff USA as to Defendant Richard Ayvazyan, Marietta… — USA v. Ayvazyan et al (Dkt. 502)

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The Government's Supplemental Trial Memorandum Regarding Criminal Forfeiture, Document 502 filed 06/10/21 in United States v. Richard Ayvazyan et al., No. CR 20-00579(A)-SVW, in the Central District of California. The memorandum says the first superseding indictment contains a number of forfeiture allegations and sets forth the procedures that would apply at the criminal forfeiture phase of trial if any of the defendants are found guilty of one or more charges associated with a forfeiture allegation. It describes criminal forfeiture as imposed on a convicted defendant as part of sentencing and as not an element of the underlying substantive offense. It states that the government intends to seek forfeiture of the property set forth in the first superseding indictment and the first amended bill of particulars (Dkt. No. 407) upon a conviction on an associated count.

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TRACY L. WILKISON 
Acting United States Attorney 
SCOTT M. GARRINGER 
Assistant United States Attorney 
Chief, Criminal Division 
SCOTT PAETTY (Cal. Bar No. 274719) 
CATHERINE AHN (Cal. Bar No. 248286) 
BRIAN FAERSTEIN (Cal. Bar No. 274850) 
Assistant United States Attorneys 
Major Frauds/Environmental and Community Safety Crimes Sections 
1100/1300 United States Courthouse 
312 North Spring Street 
Los Angeles, California 90012 
Telephone: (213) 894-6527/2424/3819 
Facsimile: (213) 894-6269/0141 
E-mail: 
Scott.Paetty@usdoj.gov 
 
Catherine.S.Ahn@usdoj.gov 
 
Brian.Faerstein@usdoj.gov 
 
DANIEL S. KAHN 
Acting Chief, Fraud Section 
Criminal Division, U.S. Department of Justice 
CHRISTOPHER FENTON 
Trial Attorney, Fraud Section 
Criminal Division, U.S. Department of Justice 
1400 New York Avenue NW, 3rd Floor 
Washington, DC 20530 
Telephone: (202) 320-0539 
Facsimile: (202) 514-0152 
E-mail: 
Christopher.Fenton@usdoj.gov 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
UNITED STATES DISTRICT COURT 
 
FOR THE CENTRAL DISTRICT OF CALIFORNIA 
 
UNITED STATES OF AMERICA, 
Plaintiff, 
v. 
RICHARD AYVAZYAN,  
     Aka “Richard Ayazian” and 
“Iuliia Zhadko,” et al. 
 
Defendants. 
No. CR 20-00579(A)-SVW             
GOVERNMENT’S SUPPLEMENTAL TRIAL 
MEMORANDUM REGARDING CRIMINAL  
FORFEITURE  
 
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MEMORANDUM OF POINTS AND AUTHORITIES 
I. 
INTRODUCTION 
In addition to setting forth criminal charges, the first 
superseding indictment in this action contains a number of forfeiture 
allegations.  This supplemental memorandum sets forth the procedures 
that would apply at the criminal forfeiture phase of trial, in the 
event that any of the defendants are found guilty of one or more 
charges associated with a forfeiture allegation. Pursuant to these 
procedures, the Court or jury would then determine whether such a 
defendant’s interest in the associated property identified in the 
forfeiture allegations of the first superseding indictment and/or 
first amended bill of particulars (“FABOP”) should be forfeited.   
II. 
FORFEITURE PROCEDURES 
A. 
Overview of Criminal Forfeiture 
Criminal forfeiture is imposed on a convicted defendant as part 
of sentencing.  It is not an element of the underlying substantive 
offense.  See Libretti v. United States, 516 U.S. 29, 39 (1995) (“Our 
precedents have likewise characterized criminal forfeiture as an 
aspect of punishment imposed following conviction of a substantive 
criminal offense.”); United States v. Feldman, 853 F.2d 648, 662 (9th 
Cir. 1988) (holding that “trial courts should bifurcate forfeiture 
proceedings from ascertainment of guilt, requiring separate jury 
deliberations”). 
Criminal forfeiture is an important sentencing tool, carrying 
into effect Congressional intent to deprive criminals and criminal 
organizations of the instrumentalities and profits of their illegal 
conduct.  See Kaley v. United States, 571 U.S. 320, 323 (2014) 
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(forfeiture serves to punish the wrong-doer, deter future illegality, 
lessen the economic power of criminal enterprises, compensate 
victims, improve conditions in crime-damaged communities, and support 
law enforcement activities such as police training). 
Criminal forfeiture is in personam, in that it may be imposed 
only after a criminal conviction, and applies only to the property of 
the convicted defendant.  See United States v. Lazarenko, 476 F.3d 
642, 647 (9th Cir. 2007); United States v. Louthian, 756 F.3d 295, 
307 n.12 (4th Cir. 2014) (criminal and civil forfeiture are “distinct 
law enforcement tools” -- the former is an in personam action that 
requires a conviction, and the latter is an in rem action against the 
property itself); and United States v. Vampire Nation, 451 F.3d 189, 
202 (3d Cir. 2006) (distinguishing civil and criminal forfeiture). 
Finally, the extent of criminal forfeiture is determined by the 
conviction.  The forfeiture must correspond in nature and scope to 
the underlying criminal conduct for which the defendant was 
convicted. See United States v. Messino, 382 F.3d 704, 714 (7th Cir. 
2004). 
B. 
The Property Sought for Forfeiture 
The government intends to seek forfeiture of the property set 
forth in the first superseding indictment and the FABOP (Dkt. No. 
407) in the event of any defendant’s conviction on an associated 
count in the first superseding indictment.  
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C. 
Relevant Statutes Permitting Criminal Forfeiture 
1. 
Forfeiture Authority Based On Fraud Offenses – 18 
U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c) 
 
Section 981(a)(1)(C) of Title 18 of the United States Code and 
section 2461(c) of Title 28 of the United States Code authorize the 
criminal forfeiture of any property, real or personal, which 
constitutes or is derived from proceeds obtained directly or 
indirectly as the result of certain violations, including violations 
of the anti-fraud provisions of 18 U.S.C. §§ 1343 (Wire Fraud) and 
1344 (Bank Fraud).   
2. 
Forfeiture Authority Based On Fraud Offenses – 18 
U.S.C. § 982(a)(2) 
 
Section 982(a)(2) of Title 18 of the United States Code 
authorizes the criminal forfeiture of any property, real or personal, 
which constitutes or is derived from proceeds obtained directly or 
indirectly as the result of certain violations, including violations 
of 18 U.S.C. § 1028A (Aggravated Identity Theft). See also United 
States v. Pollard, 850 F.3d 1038, 1042 (9th Cir. 2017). 
3. 
Forfeiture Authority Based On 18 U.S.C. § 1028(b)  
 
Section 1028(b) of Title 18 of the United States Code authorizes 
the criminal forfeiture of any personal property that was used or 
intended to be used in violation of, among other offenses, 18 U.S.C. 
§ 1028A (Aggravated Identity Theft). 
4. 
Forfeiture Authority Based On Money Laundering 
Offenses – 18 U.S.C. § 982(a)(1) 
 
Section 982(a)(1) of Title 18 of the United States Code 
authorizes the criminal forfeiture of any property, real or personal, 
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that was involved in violations of 18 U.S.C. § 1956 (Concealment 
Money Laundering) and 18 U.S.C. § 1957 (Knowingly Engaging or 
Attempting to Engage In Monetary Transaction in Property Derived from 
Specified Unlawful Activity), or any property traceable to such 
property. 
D. 
Criminal Forfeiture Procedures 
1. 
Forfeitability of Property Sought for Forfeiture  
The government is required to provide notice of its intent to 
seek forfeiture in the indictment or information. See Fed. R. Crim. 
P. 32.2(a) (“A court must not enter a judgment of forfeiture in a 
criminal proceeding unless the indictment or information contains 
notice to the defendant that the government will seek forfeiture of 
property as part of any sentence in accordance with the applicable 
statute.”).  The first superseding indictment and FABOP have provided 
such notice. 
Following conviction, forfeitability of property sought for 
forfeiture is determined either by the Court or the jury,1 depending 
on the election of either party.  Rule 32.2(b)(1) provides: 
(A) Forfeiture Determinations. As soon as practical after a 
verdict or finding of guilty, or after a plea of guilty or 
nolo contendere is accepted, 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. If the 
government seeks forfeiture of specific property, the court 
must determine whether the government has established the 
requisite nexus between the property and the offense. If 
the government seeks a personal money judgment, the court 
                     
1 The right of either party to retain the jury to determine the 
forfeitability of real or personal property sought for forfeiture is 
set out at Rule 32.2(b)(5)(A)(“In any case tried before a jury, if 
the indictment or information states that the government is seeking 
forfeiture, the court must determine before the jury begins 
deliberating whether either party requests that the jury be retained 
to determine the forfeitability of specific property if it returns a 
guilty verdict.”). 
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must determine the amount of money that the defendant will 
be ordered to pay.  
 
The forfeiture determination may be based upon evidence already 
in the record, and on any additional evidence or information 
submitted by the parties during the forfeiture phase and accepted by 
the Court as relevant and reliable. See Fed. R. Crim. P. 32(b)(1)(B);  
United States v. Capoccia, 503 F.3d 103, 109 (2d Cir. 2007) (finder 
of fact may rely on evidence from the guilt phase; it is not 
necessary for the government to reintroduce that evidence in the 
forfeiture phase).  To the extent that the government offers new 
evidence during the forfeiture phase, reliable hearsay evidence is 
admissible, as the forfeiture phase of the trial is merely a 
part of the sentencing process. See United States v. Ali, 619 F.3d 
713, 720 (7th Cir. 2010) (because forfeiture is part of sentencing, 
less stringent evidentiary standards apply in the forfeiture phase of 
the trial; the evidence need only be “reliable”); Capoccia, 503 F.3d 
at 109 (Rule 32.2(b)(1) allows the court to consider “evidence or 
information,” making it clear that the court may consider hearsay; 
this is consistent with forfeiture being part of the sentencing 
process where hearsay is admissible); United States v. Creighton, 52 
Fed. Appx. 31, 35-36 (9th Cir. 2002) (hearsay is admissible at 
sentencing and therefore may be considered in the forfeiture phase). 
In the event that a party “timely requests to have the jury 
determine forfeiture, the government must submit a proposed Special 
Verdict Form listing each property subject to forfeiture and asking 
the jury to determine whether the government has established the 
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requisite nexus between the property and the offense committed by the 
defendant.”  Fed. R. Crim. P. 32(b)(5)(B).2 
2. 
Procedural Rules for the Forfeiture Phase and Entry of 
a Preliminary Order of Forfeiture 
 
As indicated above, Rule 32.2(a) requires that the determination 
of what property is subject to forfeiture under the applicable 
statute be determined “as soon as practicable after a finding of 
guilty.”   
The standard of proof regarding the criminal forfeitability of 
property is preponderance of the evidence.  United States v. Garcia-
Guizar, 160 F.3d 511, 518 (9th Cir. 1998) (preponderance standard is 
constitutional because criminal forfeiture is not a separate offense, 
but only an additional penalty for an offense that was established 
beyond a reasonable doubt); United States v. Hernandez-Escarsega, 886 
F.2d 1560, 1576-77 (9th Cir. 1989) (interpreting identical language 
in 21 U.S.C. § 853, the forfeiture statute applicable to most 
criminal forfeiture proceedings). 
At the forfeiture stage, a defendant is not permitted to 
relitigate the legality of his or her conduct or otherwise attempt to 
undermine the jury’s finding of guilt. United States v. Warshak, 631 
F.3d 266, 331 (6th Cir. 2010) (affirming district court’s refusal to 
let defendant introduce evidence tending to show his conduct was not 
illegal, and holding that in the forfeiture phase the only question 
is the nexus between the conduct and the offense).  The only question 
                     
2 The government has already submitted proposed forfeiture phase 
jury instructions. See Dkt. No. 373, at 9. Because the scope of any 
special verdict form will be determined largely by the counts of 
conviction, the government intends to submit its proposed verdict 
form following any jury verdict during the guilt phase.  
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to be determined during the forfeiture phase is whether the evidence 
submitted during the guilt phase, together with any additional 
evidence received during the forfeiture phase, establishes by a 
preponderance of the evidence that there is the requisite nexus3 
between the underlying crime(s) of conviction and the property sought 
to be forfeited by the government.4  
If the jury finds that there is such a nexus, the Court must 
promptly enter a preliminary order of forfeiture (“preliminary 
order”). See Fed. R. Crim. P. 32.2(b)(2)(A) (“If the [finder of fact] 
finds that the property is subject to forfeiture, [the court] must 
promptly enter a preliminary order of forfeiture ... directing the 
forfeiture of specific property.”); United States v. Monsanto, 491 
U.S. 600, 607 (1989) (“Congress could not have chosen stronger words 
to express its intent that forfeiture be mandatory in cases where the 
statute applied.”); United States v. Newman, 659 F.3d 1235, 1240 (9th 
Cir. 2011) (“When the Government has met the requirements for 
criminal forfeiture, the district court must impose criminal 
                     
3 This “nexus” is defined by statute for each offense for which 
forfeiture is authorized.  See e.g., Capoccia, 503 F.3d at 115 (“The 
‘requisite nexus’ for a violation of 18 U.S.C. § 2314 is set forth in 
18 U.S.C. § 981(a)(1)(C), which subjects to civil forfeiture ‘[a]ny 
property, real or personal, which constitutes or is derived from 
proceeds traceable to a violation of [various sections of Title 18] 
or any offense constituting ‘specified unlawful activity’ (as defined 
in section 1956(c)(7) of this title), or a conspiracy to commit such 
offense.’”) 
4 “[F]or example, if the Government is seeking to forfeit the 
vessel that the defendant used to smuggle drugs, either party may 
request that the jury be retained to determine whether the Government 
has established the factual nexus between the vessel and the 
particular offense on which the defendant was found guilty. In other 
words, the jury would have to determine whether the vessel was ‘used 
to commit or to facilitate the commission” of the defendant’s 
offense.’” Stefan Cassela, Asset Forfeiture Law in the United States, 
§ 18-4(a).  
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forfeiture, subject only to statutory and constitutional limits”); 
id. (“[T]he district court has no discretion to reduce or eliminate 
mandatory criminal forfeiture”). 
While the preliminary order forfeits the defendant’s interest in 
the property, it does not include a determination of who is the owner 
of the property subject to forfeiture.  That determination is 
deferred to the ancillary proceedings that follow the entry of the 
preliminary order, in which any third party interests in the property 
are considered and resolved.  See Advisory Committee Notes to Federal 
Rule of Criminal Procedure 32.2 (2000 Adoption) (“Under [the 
statutory forfeiture scheme first enacted in 1984,] the court orders 
the forfeiture of the defendant’s interest in the property - whatever 
that interest may be -- in the criminal case.  At that point, the 
court conducts a separate proceeding in which all potential third 
party claimants are given an opportunity to challenge the forfeiture 
by asserting a superior interest in the property.  This proceeding 
does not involve relitigation of the forfeitability of the property; 
its only purpose is to determine whether any third party has a legal 
interest in the forfeited property.”); United States v. Nava, 404 
F.3d 1119, 1132 (9th Cir. 2005) (district court properly instructed 
jury that questions of ownership “were not before them”).  
Because the determination of whether a third party has a legal 
interest in the forfeited property is made at a separate proceeding, 
a defendant cannot object to the entry of a preliminary order on the 
ground that the property at issue does not belong to him.  United 
States v. Schlesinger, 396 F. Supp. 2d 267, 273 (E.D.N.Y. 2005); 
United States v. Nicolo, 597 F. Supp. 2d 342, 346 (W.D.N.Y. 2009) (in 
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the forfeiture phase of the trial, the court “is not to consider 
potentially thorny issues concerning third party ownership of 
property sought to be forfeited”; if the government establishes the 
required nexus to the offense, the property must be forfeited). 
III. CONCLUSION 
The government requests that the Court follow the aforementioned 
procedures in the event that any defendant is found guilty of one or 
more offenses in the first superseding indictment.  Should any 
defendant be so convicted, the government will propose a 
corresponding special verdict form. 
 
Dated: June 10, 2021 
Respectfully submitted, 
 
TRACY L. WILKISON 
United States Attorney 
 
SCOTT M. GARRINGER 
Assistant United States Attorney 
Chief, Criminal Division 
 
 
      /s/ 
 
DAN G. BOYLE 
Assistant United States Attorney 
Asset Forfeiture Section 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
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