Information — United States v. Shibley (Dkt. 173, W.D. Wash. No. 2:20-cr-00174)

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U.S. District Court for the Western District of Washington · No. 2:20-cr-00174-JCC · Doc. 173 · 2022-06-15 · Docket on CourtListener

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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 1 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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The Hon. John C. Coughenour 
 
 
 
 
 
 
 
UNITED STATES DISTRICT COURT FOR THE 
WESTERN DISTRICT OF WASHINGTON 
AT SEATTLE 
 
UNITED STATES OF AMERICA, 
 
        Plaintiff, 
 
v. 
 
ERIC SHIBLEY, 
                           Defendant. 
 
CASE NO. CR20-174-JCC 
 
UNITED STATES’ RESPONSE 
TO DEFENSE’S MOTION FOR 
CLARIFICATION OF 
RESTITUTION CREDIT FOR 
FORFEITED FUNDS OR FOR 
INDICATIVE RULING 
 
 
I. 
INTRODUCTION 
On March 8, 2022, the Court sentenced the Defendant, Eric Shibley, and entered a 
judgment that incorporated a combined Preliminary Order of Forfeiture and Order of 
Forfeiture and ordered Defendant Shibley to pay restitution of $1,438,000.00.  Dkt. 
Nos. 144, 152, 159.  Defendant Shibley now seeks an Order from the Court authorizing 
credit against his restitution order for forfeited property.  Dkt. No. 170.  Because 
restitution and forfeiture are separate, distinct, and mandatory parts of a criminal sentence 
and only the United States Attorney General may direct forfeited funds be applied to 
orders of restitution, Defendant Shibley has no right to have, and this Court cannot order, 
forfeited funds credited to his restitution obligation. 
Case 2:20-cr-00174-JCC     Document 173     Filed 06/15/22     Page 1 of 8

 
 
 
U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 2 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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Defendant Shibley engaged in a scheme to obtain over $3.6 million dollars from 
COVID-19 relief programs set up by the government, including the Paycheck Protection 
Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) program run by the 
Small Business Administration (“SBA”).  As part of his scheme, Defendant Shibley 
submitted false information and documentation about the payroll, employees, and 
revenues of the entities he controlled to obtain pandemic relief funds.  Defendant Shibley 
received over $2.8 million in PPP and EIDL funds, which he immediately transferred to 
other accounts and attempted to withdraw in cash.  The United States seized some of 
these funds with forfeiture seizure warrants.  The financial institutions also recovered 
some of these funds.  Defendant Shibley was successful in withdrawing approximately 
$200,000 in cash that the government was unable to trace. 
The Court ordered Defendant Shibley to pay restitution of $1,438,000, to be 
divided by the victims of the PPP loans, Huntington Bank ($200,00) and Customers Bank 
($960,000), and the EIDL loans, the SBA ($278,000), to make those victims whole.  Dkt. 
Nos. 152, 159.  The Court also ordered Defendant Shibley’s interest in the proceeds of 
his Wire Fraud and Bank Fraud schemes and the property involved in his Money 
Laundering offenses forfeited to the United States.  This forfeited property includes loan 
proceeds seized from accounts controlled by Defendant Shibley at Navy Federal Credit 
Union ($49,500.86), Wells Fargo Bank ($100,000 and $804,816.63), and Verity Credit 
Union ($114,440.00 and $114,743.59), and a sum of money reflecting the remaining 
proceeds the government was unable to seize ($254,199).  Dkt. No. 144.   
II. 
LAW AND ARGUMENT 
A. 
Restitution and Forfeiture are Mandatory. 
Restitution and forfeiture are both mandatory.  See United States v. Feldman, 853 
F.2d 648, 663-64 (9th Cir. 1988), cert. denied, 489 U.S. 1030 (1989); United States v. 
Carter, 742 F.3d 440 (9th Cir. 2014).   
This Court ordered restitution under 18 U.S.C. § 3663A, the Mandatory Victim 
Restitution Act (MVRA); 18 U.S.C. § 3664; and 18 U.S.C. § 3771(a)(6) and (c)(1).  The 
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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 3 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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MRA made restitution mandatory for most federal crimes, including fraud, where a 
victim suffers a loss.  See United States v. Carter, 742 F.3d at 446, citing 18 U.S.C. 
§§ 3663A(a)(1), (c)(1)(a)(ii).  Restitution makes the victim whole by restoring to the 
victim the actual loss caused by the defendant's criminal conduct.  United States v. 
Newman, 659 F.3d 1235, 1241 (9th Cir. 2011), abrogated on other grounds by Honeycutt 
v. United States, 137 S.Ct. 1626 (2017); see also United States v. Hunter, 618 F.3d 1062, 
1064 (9th Cir. 2010). 
Courts must also order forfeiture when a defendant is convicted of a crime that 
provides for forfeiture as part of the penalty.  See, e.g., 18 U.S.C. § 982(a)(1) (“The court, 
in imposing sentence on a person convicted of an offense in violation of section 1956, 
1957, or 1960 of this title, shall order that the person forfeit to the United States any 
property, real or personal, involved in such offense, or any property traceable to such 
property.”); see also United States v. Monsanto, 491 U.S. 600, 607 (1989) (stating that by 
using the words “shall order” in a forfeiture statute, “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 at 1240 ( “the district court has no 
discretion to reduce or eliminate mandatory criminal forfeiture.”). 
B. 
Restitution and Forfeiture are Different. 
Restitution and forfeiture serve distinct goals and are calculated differently.  See 
United States v. Carter, 742 F.3d 440 (9th Cir. 2014); United States v. Davis, 706 F.3d 
1081 (9th Cir. 2013); United States v. Bright, 353 F.3d 1114, 1120 (9th Cir. 2004).  The 
defendant's criminal proceeds and assets involved in the offense are subject to forfeiture.  
Restitution, in contrast, seeks to repay the victims of crime for their out-of-pocket 
expenses and losses caused by the offense, and can be paid out of any assets or earnings 
that the defendant has.  See United States v. Rich, 603 F.3d 722 (9th Cir. 2010).  In sum, 
forfeiture is imposed as punishment for a crime, and restitution is to make the victim 
whole.  United States v. Newman, 659 F.3d 1235, reaffirmed in United States v. Davis, 
706 F.3d 1081 (9th Cir. 2013). 
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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 4 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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C. 
Restitution and Forfeiture Do Not Constitute “Double Dipping.” 
Defendants may be required to pay restitution and to forfeit the same amounts and 
that result is not an impermissible “double recovery” or “double dipping.”  United States 
v. Newman, 659 F.3d at 1241-42  (“While we recognize to the untrained eye, this might 
appear to be a ‘double dip,’ restitution and forfeiture serve different goals, and we have 
approved of [ordering both restitution and forfeiture] in the past”), quoting United States 
v. Leahy, 464 F.3d 773, 793 n. 8 (7th Cir. 2006); see also United States v. Feldman, 853 
F.2d at 663–664 (a court does not lose its discretion to impose a sentence of restitution 
merely because a defendant must also forfeit the proceeds of illegal activity); 
United States v. Boulware, 384 F.3d 794, 813 (9th Cir.2004).   
Here, the Court imposed a restitution obligation of $1,438,000 to be paid to the 
three victims:  Customers Bank ($960,000), Huntington Bank ($200,000), and the Small 
Business Administration ($278,000).  A federal government agency, such as the Small 
Business Administration may quality as a victim entitled to receive compensation 
through the restoration and remission procedures, if it demonstrates that it suffered a 
pecuniary loss as a direct result of the offense underlying the forfeiture.  See 28 C.F.R. 
§§ 9.2 and 9.8(b).  The act of forfeiting the seized assets and depositing the proceeds into 
the Assets Forfeiture Fund does not, however, mean that the seizing agency has received 
victim compensation.  The victim agency should be included in the restitution order for 
restoration purposes, as it is here.  See Asset Forfeiture Policy Manual Chapter 14, II.D. 
In United States v. Davis, the Ninth Circuit upheld forfeiture to the Department of 
Justice and restitution to the Federal Bureau of Investigation—an agency within the 
Department of Justice—finding that it would be appropriate even if they were to be 
considered the same “entity.”  United States v. Davis, 706 F.3d 1081. (“Even if the same 
government entity will receive both forfeiture and restitution, there is simply no double 
recovery.”).  The Davis Court held that there is no double recovery, or “windfall,” to the 
victim because forfeiture and restitution serve different purposes, and because there is no 
statutory provision providing for offset against restitution for forfeiture.  Id.  The court 
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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 5 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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noted that other circuits addressing the issue “hold or imply that if two entities are related 
closely enough, restitution or forfeiture should be reduced,” and that it was disagreeing 
with that approach.  United States v. Davis, 706 F.3d at 1083. 
D. 
Only the United States Department of Justice May Direct that Forfeited 
Funds Be Applied to Restitution Obligations and Only if Defendant Has No 
Other Assets Available to Pay Restitution. 
A district judge does not have discretion to reduce or eliminate a criminal 
forfeiture unless required by statute or the Constitution.  United States. v. Newman, 659 
F.3d at 1240.  The Ninth Circuit is among those districts holding that a district court does 
not have discretion to offset restitution and forfeiture and that the government has the 
sole discretion to apply forfeited funds to restitution.  See United States v. Newman, 659 
F.3d 1235; see also United States v. Bodouva, 853 F.3d 76, 78–79 (2d Cir. 2017) citing 
United States v. Newman, 659 F.3d 1235 (9th Cir. 2011); United States v. Browne, 505 
F.3d 1229 (11th Cir. 2007), cert. denied, 554 U.S. 918 (2008); and United States v. 
McGinty, 610 F.3d 1242, 1248 (10th Cir. 2010); see also United States v. Joseph, 743 
F.3d 1350, 1354-55 (11th Cir. 2014) (“a district court [] has no authority to offset a 
defendant’s restitution obligation by the value of the forfeited property.”) 
A criminal defendant has no right to use forfeited funds to satisfy a restitution 
obligation.  United States v. Carter, 742 F.3d 440.  Because forfeited assets are property 
of the government, courts and defendants lack authority to use them to satisfy a 
defendant’s criminal debts, including fines or restitution obligations.  See United States v. 
Trotter, 912 F.2d 964. 965-966 (8th Cir. 1990).  See also United States v. Yeh, 199 F. 
Supp.3d 998 (E.D. Va. 2016) (rejecting defendant’s claim that forfeited funds seized 
from bank accounts be credited to his restitution obligation); United States v. O’Connor, 
321 F.Supp.2d at 722, 729 (E.D. Va. 2004) (funds seized by forfeiture and those ordered 
for restitution are completely separate forms of punishment; the fact that defendant pays 
one does not negate his duty to pay the other). 
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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 6 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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Applying forfeited funds to restitution is strictly controlled by statute and only the 
government may do so.  Congress exclusively authorizes the United States Attorney 
General to exercise his discretion concerning whether to provide forfeited assets to 
victims.  21 U.S.C. § 853(i)(1); 18 U.S.C. §§ 981(e)(6) and 1963(g)(1); United States v. 
MacInnes, 223 F. App'x 549, 553 n.3 (9th Cir. 2007) (explaining that statutes and C.F.R. 
authorize the Attorney General to determine whether to provide relief to victims); 
United States v. Carter, 742 F.3d at 446 (explaining that “the Government may choose to 
assign forfeited proceeds to victims . . . .”).  The Attorney General has delegated this 
authority to the Chief of Money Laundering Asset Recovery Section (“MLARS”), 
Criminal Division, United States Department of Justice.  28 C.F.R. § 9.1(b)(2).  There is 
no presumption that a defendant will receive credit towards restitution from forfeited 
assets and no one in the United States Attorney's Office or the Department of Justice can 
promise anything about the outcome of this procedure.  It is in the exclusive realm of the 
Chief of MLARS.  28 C.F.R. § 9.1(b)(2) (“Within the Criminal Division [of the 
Department of Justice], authority to grant remission and mitigation is delegated to the 
Chief, Asset Forfeiture and Money Laundering Section” (subsequently renamed Money 
Laundering and Asset Recovery Section)). 
Department of Justice policy permits transfer of forfeited property to compensate 
victims of the offenses underlying the forfeiture—under certain circumstances.  The 
policy was created in part to implement two statutory provisions: a) under 18 U.S.C.A. 
§ 981(e)(6), the Attorney General is authorized to transfer forfeited property under 
certain circumstances as restoration to any victim of the offense giving rise to the 
forfeiture; and b) under 21 U.S.C.A. § 853(i)(1), the Attorney General is authorized, with 
respect to property forfeited under 21 U.S.C.A. § 853, to grant petitions for mitigation or 
remission of forfeiture to restore forfeited property to victims. 
This policy permits transfers of forfeited assets to satisfy restitution orders after 
the time for filing an appeal challenging either the restitution order of the forfeiture has 
passed, or all relevant appeals have been adjudicated, and where the defendant does not 
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U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 7 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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have sufficient resources to pay restitution outside of the forfeited assets.  Because 
restitution and forfeiture are mandatory and independent parts of a criminal sentence, 
forfeited assets may not be used to satisfy the restitution order if other assets are available 
for that purpose.  See Asset Forfeiture Policy Manual, Chapter 14, II.B.2.  Defendant 
Shibley has other assets, including several real properties in the Seattle area.  See Dkt. 
Nos. 58 at 2-3, 149 at 5-6; Dkt. No. 138, at 338-404, Defense Trial Exhibits A-3, A-4 
(photographs of construction work at some of Defendant Shibley’s real properties); see 
also Presentence Report at ¶ 64. 
III. 
CONCLUSION 
 
For the reasons set forth above, the United States opposes Defendant Shibley’s 
request that the Court Order forfeited funds applied against his restitution obligation.  
 
DATED this 15th day of June, 2022. 
 
Respectfully submitted, 
NICHOLAS W. BROWN 
United States Attorney 
 
 
s/Krista K. Bush 
 
KRISTA K. BUSH 
Assistant United States Attorney 
700 Stewart Street, Suite 5220 
Seattle, Washington 98101-1271 
(206) 553-7970 
Krista.Bush@usdoj.gov 
 
Case 2:20-cr-00174-JCC     Document 173     Filed 06/15/22     Page 7 of 8

 
 
 
U.S.’ Response to Defense’s Motion for Clarification of Restitution Credit for 
Forfeited Funds or for Indicative Ruling – 8 
U.S. v. Shibley, CR20-174-JCC 
UNITED STATES ATTORNEY 
700 STEWART STREET, SUITE 5220 
SEATTLE, WA 98101 
(206) 553-4399
 
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CERTIFICATE OF SERVICE 
 
 
 
I hereby certify that on June 15, 2022, I electronically filed the foregoing with the 
Clerk of the Court using the CM/ECF system, which will send notification of such filing 
to the parties of record. 
 
 
s/Hannah G. Williams 
 
 
HANNAH G. WILLIAMS 
FSA Paralegal III, Contractor 
United States Attorney’s Office 
700 Stewart Street, Suite 5220 
Seattle, Washington 98101 
(206) 553-2242 
Hannah.Williams2@usdoj.gov 
 
Case 2:20-cr-00174-JCC     Document 173     Filed 06/15/22     Page 8 of 8

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