Response 149 Response by USA as to Casey David Crowther — USA v. Crowther (Dkt. 152, M.D. Fla. No. 2:20-mj-01094, docketed in No. 2:20-cr-00114)

Record facts

U.S. District Court for the Middle District of Florida · No. 2:20-cr-00114 · Doc. 152 · 2021-06-21 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
MIDDLE DISTRICT OF FLORIDA 
FORT MYERS DIVISION 
 
UNITED STATES OF AMERICA 
 
v. 
 
 
Case No. 2:20-cr-114-JES-MRM 
 
 
CASEY DAVID CROWTHER 
 
UNITED STATES’ REPLY TO DEFENDANT’S RESPONSE  
REGARDING ENTRY OF FORFEITURE ORDERS  
 
The United States disputes the merits of the defendant’s objections to the 
requested forfeiture (Doc. 149). In support of its reply, the United States submits the 
following memorandum of law: 
MEMORANDUM OF LAW 
I. 
Introduction 
 
The defendant’s objections to forfeiture in this case ignore the well-established 
law: the requested forfeiture is mandatory. 
 
First, the defendant is required to forfeit the total amount of the fraudulent 
loans he obtained from the bank fraud and false statement offenses of which he has 
been convicted.  The defendant appears to confuse his restitution and forfeiture 
obligations, both of which are mandatory in this case.  He is not entitled to credit for 
amounts he may have repaid on the loans or any amounts he alleges he later paid on 
the loans that he believes would qualify for forgiveness. While payment towards the 
loans may ultimately reduce the amount of restitution owed, the defendant must still 
forfeit the gross proceeds he obtained from the fraudulent loans.   
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Second, the requested forfeiture does not violate the 8th Amendment.  The 
United States only seeks forfeiture of the total amount of proceeds the defendant 
obtained from the two fraudulently acquired loans.1 By definition, requiring a 
defendant to pay forfeiture in the amount of the fraudulent proceeds he or she 
obtained from their offenses cannot be grossly disproportionate to the crime.  
 
Finally, the United States is entitled to seek a forfeiture money judgment in 
this case.  The Eleventh Circuit has consistently held that the United States may seek 
a forfeiture money judgment in criminal cases when the forfeitable property is no 
longer available.  The Supreme Court has never ruled to the contrary. 
II. 
Argument 
A. 
The Defendant is Required to Forfeit the Total Amount Obtained from 
the Fraudulent Loans 
 
The defendant asserts that the United States has improperly included 
“untainted funds” in the amount sought for forfeiture because the figure includes 
amounts that he has paid back on the fraudulently acquired loans or amounts he 
allegedly later paid in accordance with the terms of the loans.  He is mistaken 
because all of the funds he acquired through his fraud are subject to forfeiture.  
As the Court is aware, the defendant either pled guilty to or was found guilty 
 
1 As the United States noted in its original motion, this figure also includes the $789,417 
involved in the two money laundering violations for which the defendant was found guilty 
(Counts Three and Four).  The defendant’s response appears to ignore the applicability of 
forfeiture to these separate money laundering violations of which he has been convicted.  
Those illegal transactions involved a $100,000 wire to the defendant’s former business 
partner on April 21, 2020 (Count Three) and a $689,417 wire on April 24, 2020, for the 
purchase of the Catamaran sought for forfeiture in this case (Count Four). 
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by a jury of multiple counts of bank fraud, making false statements to lending 
institutions, and conducting illegal monetary transactions–—all of which stemmed 
from misrepresentations he made in connection with two loan applications.  The first 
involved a loan under the Paycheck Protection Program (PPP) of the Coronavirus 
Aid, Relief, and Economic Security (CARES) Act: the defendant was convicted of 
bank fraud (Count One) and making false statements to a lending institution (Count 
Two) because of misrepresentations he made on his PPP loan application and in the 
loan documents regarding how he planned to use the loan, which ultimately caused 
to the lender to approve and disburse $2,098,700 to an account controlled by the 
defendant.  The second involved a mortgage loan: the defendant pled guilty to bank 
fraud (Count Five) and making false statements to a lending institution (Count Six) 
based on misrepresentations he made in a mortgage application regarding the extent 
of his assets, which the mortgage lender relied on when it approved and disbursed a 
$640,381.21 for the defendant’s purchase of the real property located at 3653 San 
Carlos Drive, Saint James City, Florida 33956 (the Real Property).   
The offenses were based on the lies and misrepresentations the defendant 
made while seeking the loans—they have nothing to do with accounting on the loans 
after they were disbursed.2  Based on the lies and misrepresentations in his 
applications and in the loan documents, lenders disbursed loans totaling 
$2,739,081.21 to the defendant.  The United States now seeks to forfeit that amount.  
 
2 The defendant’s accounting arguments regarding the PPP loan are no more of a defense to 
forfeiture than they were to his guilt. 
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Doc. 148 at 1.   
Forfeiture is mandatory for convictions of bank fraud and making false 
statements to lending institutions pursuant to 18 U.S.C. § 982(a)(2).  Section 18 
U.S.C. § 982(a)(2) provides that, for violations of sections 1014 or 1344, affecting 
financial institutions, among others, “t[]he court . . .  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.” (emphasis 
added).  “For purposes of criminal forfeiture, the ‘proceeds’ of a fraudulently 
obtained loan equal the amount of the loan.” United States v. Newman, 659 F.3d 1235, 
1244 (9th Cir.2011), abrogated on other grounds by Honeycutt v. United States, 137 S.Ct. 
1626, 1635 (2017), citing United States v. Boulware, 384 F.3d 794, 813 (9th Cir.2004); 
see also United States v. Joel, 2012 WL 2499424 at *3 (M.D.Fla. June 5, 2012) (“[a] 
defendant convicted of a financial institution offense is liable for forfeiture of the 
entire amount of the loan.”). 
This makes sense because the United States’ interest in criminal proceeds 
relates back to the time that the act giving rise to the forfeiture occurs.  See United 
States v. Browne, 505 F.3d 1229, 1281 (11th Cir. 2007) (United States’ interest in 
embezzlement proceeds dated back to when the defendant embezzled money from 
the victim).  In other words, in financial institution fraud cases such as this, the entire 
amount of the loan a defendant applies for and ultimately receives becomes 
forfeitable criminal proceeds, or “tainted funds,” the moment an application 
containing lies or misrepresentations is submitted to a bank in support of that loan.  
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Here, the sum of the two loans the defendant fraudulently obtained—
$2,739,081.21—constitutes “tainted funds” or criminal proceeds in this case, which 
are subject to mandatory forfeiture pursuant to 18 U.S.C. § 982(a)(2)(A). 
The defendant’s objections and arguments relating to payments he made or 
intended to make towards the loans ignores the law—forfeiture is mandatory and 
cannot be offset by restitution already paid to victims.  See United States v. Bailey, 630 
Fed. Appx. 902, 903-904 (11th Cir. 2015) (the Eleventh Circuit has “refused to offset 
the required forfeiture by restitution already paid to victims, recognizing that 
forfeiture and restitution are separate concepts serving different goals”); see also 
United States v. Joseph, 743 F.3d 1350 (11th Cir. 2014) (finding that the district court’s 
oral pronouncement directing that restitution to the IRS be offset by the amount of 
the forfeiture was contrary to law and affirming written judgment, which declined to 
make such an offset).  Similarly, contrary to the defendant’s assertions, he is not 
entitled to claim credit against forfeiture for any portion of a fraudulently obtained 
loan he subsequently repays.  See United States v. Holzendorf, 576 Fed. Appx. 932 (11th 
Cir. 2014) (holding that gross proceeds of mortgage fraud scheme was not subject to 
reduction for amounts repaid on loans) (collecting cases).  The flaw in the 
defendant’s argument on this issue appears to stem from a misunderstanding of his 
restitution and forfeiture obligations, which are both mandatory in this case.  
Restitution focuses on the harm to the victim, whereas forfeiture focuses on 
punishing the defendant. Browne, 505 F.3d 1229 at 1281.  As a result, the court 
calculates restitution based on the loss to the victims and calculates forfeiture based 
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on how much the defendant obtained from his crimes. Id.   
While the United States does not dispute that the defendant should receive 
credit against any restitution owed in this case for payments he makes or has made to 
the victim lenders, the defendant is not entitled to double credit against his forfeiture 
obligation for those payments.  See United States v. Hoffman-Vaile, 568 F.3d 1335, 1345 
(11th Cir. 2009) (following Browne; doctor convicted of Medicare fraud not entitled to 
offset forfeiture to reflect restitution she has already paid to victims). 
For these same reasons, the defendant’s suggestion that he is entitled to a 
return of the proceeds obtained from the interlocutory sale of the Real Property is 
equally without merit.  As explained above, the United States’ interest in the 
criminal proceeds from the bank fraud and false statement offenses relating to the 
fraudulent mortgage vested the moment the mortgage loan was funded based on the 
defendant’s misrepresentations.   The Real Property, which was directly traceable to 
proceeds from the fraudulent mortgage, was then subject to forfeiture pursuant to 18 
U.S.C. § 982(a)(2)(A).   
In an effort to save all parties’ the unnecessary costs of maintaining the Real 
Property during the pendency of this case, the United States agreed to an 
interlocutory sale so that the property could be sold and the victim lender could be 
paid in full.  This allowed the mortgage loan—or, what would have been the 
mandatory restitution for the mortgage fraud offenses—to be paid in full. The parties 
mutually agreed, however, that the net proceeds obtained from the sale of the Real 
Property would be held as substitute res—or, as the defendant likes to call it, the 
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substitute “tainted property”—subject to forfeiture in lieu of the Real Property itself.  
See Doc. 148-1. The defendant benefited from this sale because it allowed his 
restitution obligation to be satisfied.  As detailed above, however, he is not entitled to 
claim double credit and nullify his forfeiture obligation as well. 
B. 
Forfeiture of the Fraudulent Loan Proceeds Does Not Violate the 8th 
Amendment 
 
The defendant also erroneously contends that the requested forfeiture would 
amount to an excessive fine in violation of the Eighth Amendment.  The Eighth 
Amendment prohibits, among other things, excessive punishment in the form of an 
excessive fine payable to the government.  Austin v. United States, 509 U.S. 602, 607-
10 (1993).  Under the Eighth Amendment, a forfeiture is excessive “if it is grossly 
disproportional to the gravity of a defendant’s offense.” United States v. Bajakajian, 
524 U.S. 321, 334 (1998).   Three factors guide the gross-disproportionality inquiry: 
“(1) whether the defendant falls into the class of persons at whom the criminal 
statute was principally directed; (2) other penalties authorized by the legislature (or 
the Sentencing Commission); and (3) the harm caused by the defendant.” Browne, 
505 F.3d 1229 at 1281. The defendant bears the burden of showing that a forfeiture 
money judgment is grossly disproportionate to the gravity of his offense, Bajakajian, 
524 U.S. at 334, and the defendant cannot meet that burden here. 
 
This Court need not undertake an analysis of the Browne factors, however, 
because the requested forfeiture money judgment is based simply on the proceeds of 
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the fraudulent acquired loans.3  As a matter of law and logic, requiring the defendant 
to forfeit proceeds of his offenses is exactly proportional to the gravity of the offense.  
See United States v. Betancourt, 422 F.3d 240, 251 (5th Cir. 2005) (“This Court has held 
that the Eighth Amendment has no application to forfeiture of property acquired 
with drug proceeds.”); cf. United States v. Rosin, 263 F. App’x 16, 37 (11th Cir. 2008) 
(requiring defendant to pay both restitution and a forfeiture money judgment in the 
amount of fraud proceeds does not violate excessive fine); United States v. MacKay, 
506 F. Supp. 2d 1206, 1212 (S.D. Fla. 2007) (ordering defendant to pay money 
judgment for exact amount of proceeds of his offenses is not excessive).   
  
The requested money judgment in this case cannot be considered grossly 
disproportionate to the harm caused by the defendant’s crimes, because it represents 
exactly the fruits of his criminal conduct.4  The requested forfeiture money judgment, 
which is equivalent to the proceeds of the fraudulently acquired loans, is 
constitutionally appropriate and legally required. 
C. 
Forfeiture Money Judgments 
Finally, contrary to clear Eleventh Circuit precedent, the defendant baldly 
 
3 It is worth noting that for Count One, alone, the defendant could face a fine of up to 
$4,197,400 under 18 U.S.C. § 3571(d).  In other words, the requested forfeiture order of 
$2,739,081.21 is significantly less than the statutorily authorized fines in this case. 
 
4 While the United States believes that any post-loan disbursement accounting has no 
bearing on forfeiture, the defendant’s claim that the forfeiture is somehow excessive because 
he allegedly spent money on payroll during the “covered period” for the PPP loan is 
disputed. The United States introduced evidence at trial that the defendant paid employees 
who did not exist and family members who performed no work.  His accounting is 
completely unreliable. 
 
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asserts that there is no statutory authority for forfeiture money judgments.5  The 
Eleventh Circuit has consistently upheld the entry of forfeiture money judgments in 
criminal cases where the proceeds or directly forfeitable assets are no longer 
available.  See United States v. Waked Hatum, 969 F.3d 1156 (11th Cir. 2020) (following 
existing precedent in rejecting defendant’s contention that forfeiture money 
judgments are not permitted by statute); United States v. Elbeblawy, 899 F.3d 925, 940 
(11th Cir. 2018) (“proceeds” of a criminal offense “constitute[s] a defendant’s interest 
in property” and are subject to forfeiture via an in personam money judgment); 
United States v. Padron, 527 F.3d 1156, 1162 (11th Cir. 2008) (“[t]he federal rules 
explicitly contemplate the entry of money judgments in criminal forfeiture cases.”) 
Regardless, the defendant’s argument implicitly suggests that a forfeiture 
money judgment seeks something other than the forfeiture of the proceeds that were 
transferred to his control as a result of his fraud.  That is not so.  The plain language 
of 18 U.S.C. § 982(a)(2)(A) authorizes the forfeiture of the $2,098,700 in PPP loan 
proceeds that were deposited into the defendant’s Sanibel Captiva Account ending in 
6781 on April 14, 2020, as a result of the bank fraud and false statement offenses.  
Likewise, section 982(a)(2)(A) authorizes the forfeiture of the $640,381.21 that the 
defendant received as a result of the bank fraud and false statement offenses relating 
to the mortgage.  
 
5 The only support offered by the defendant for this position are two pending petitions for 
writs of certiorari.  Neither of these petitions have been granted, much less resulted in any 
change in the status of the law.   
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That the funds have been spent changes nothing.6  Indeed, 21 U.S.C. § 853(p) 
provides that if, because of any action or omission by the defendant, the specific 
property subject to forfeiture has been transferred or sold to a third party, or 
substantially diminished in value, then the court “shall order the forfeiture of any 
other property of the defendant, up to the value of the property” transferred or sold.  
21 U.S.C. § 853(p)(1)(B) and (2).  To suggest that there should be no forfeiture 
because a defendant has transferred, spent, or otherwise depleted the criminal 
proceeds he obtained would defeat the purpose of this provision.  As the Supreme 
Court recently explained, “[b]y adopting an in personam aspect to criminal forfeiture, 
and providing for substitute-asset forfeiture, Congress made it easier for the 
Government to hold the defendant who acquired the tainted property responsible.”  
Honeycutt v. United States, 137 S.Ct. 1626, 1635 (2017). 
 
 
 
 
 
 
 
 
 
6 Forfeitures under section 982 are “governed by the provisions of [21 U.S.C. § 853].”  18 
U.S.C. § 982(b)(2).   
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III. 
Conclusion 
For the reasons set forth above, the United States’ Motion for Order of 
Forfeiture and Preliminary Order of Forfeiture for Direct Assets should be granted.   
Respectfully submitted, 
KARIN HOPPMANN 
Acting United States Attorney 
 
 
By: 
s/Suzanne C. Nebesky______________                                
 
 
 
 
 
 
SUZANNE C. NEBESKY 
Assistant United States Attorney 
Fla. Bar No. 59377 
400 N. Tampa Street, Suite 3200 
Tampa, Florida 33602 
Tel:   (813) 274-6000 
 
E-mail: suzanne.nebesky@usdoj.gov 
 
 
 
CERTIFICATE OF SERVICE 
 
I hereby certify that on June 21, 2021, I electronically filed the foregoing with 
the Clerk of the Court by using the CM/ECF system which will send a notice of 
electronic filing to counsel of record. 
 
s/Suzanne C. Nebesky____________                       
SUZANNE C. NEBESKY 
Assistant United States Attorney 
 
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