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RESPONSE by USA as to Martin Kao re 149 Objection, Response to… — PPP Attempt Conspiracy Legal Filings (Dkt. 154)
No. 1:21-cr-00061-LEK · Doc. 154 · Docket on CourtListener
Summary
The United States' response to Tiffany Jennifer Lam's objection (ECF No. 149) to its motion to apply defendant Martin Kao's bond deposit to his special assessment and restitution, filed February 27, 2025 as Document 154 in United States v. Martin Kao, Crim. No. 21-00061 LEK, in the U.S. District Court for the District of Hawaii. The response states that Kao posted a $2 million bond by cash deposit on October 8, 2020 with an affidavit stating he owned the cash, and that on February 13, 2025 he was ordered to pay restitution of $12,841,490.00. It argues under 28 U.S.C. § 2044 that the money belongs to Kao, citing records showing the Merrill Lynch account was an individual account and not a joint account with Lam. It argues that Hawaii divorce law does not apply because no divorce proceeding is pending, and asks the Court to apply the $2,000,000 cash bond to Kao's criminal penalties.
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Case 1:21-cr-00061-LEK Document 154 Filed 02/27/25 Page 1 of 12 PageID.1325
KENNETH M. SORENSON
Acting United States Attorney
District of Hawaii
CRAIG S. NOLAN
SYDNEY SPECTOR #11232
Assistant U.S. Attorneys
Room 6100, PJKK Federal Building
300 Ala Moana Blvd.
Honolulu, Hawaii 96850
Telephone: (808) 541-2850
Facsimile: (808) 541-2958
Email: Craig.Nolan@usdoj.gov
Sydney.Spector@usdoj.gov
Attorneys for Plaintiff
UNITED STATES OF AMERICA
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
UNITED STATES OF AMERICA, Crim. No. 21-00061 LEK
Plaintiff, RESPONSE TO TIFFANY JENNIFER
LAM’S OBJECTION TO THE
v. UNITED STATES’ MOTION FOR
ORDER AUTHORIZING
MARTIN KAO, APPLICATION OF DEFENDANT’S
BOND DEPOSIT TO PAYMENT OF
Defendant. SPECIAL ASSESSMENT AND
RESTITUTION (ECF NO. 149);
EXHIBIT A; CERTIFICATE OF
SERVICE
Case 1:21-cr-00061-LEK Document 154 Filed 02/27/25 Page 2 of 12 PageID.1326
RESPONSE TO TIFFANY JENNIFER LAM’S OBJECTION TO THE
UNITED STATES’ MOTION FOR ORDER AUTHORIZING
APPLICATION OF DEFENDANT’S BOND DEPOSIT TO
PAYMENT OF SPECIAL ASSESSMENT AND RESTITUTION (ECF No. 149)
The United States of America, by and through its undersigned attorneys,
hereby responds to Jennifer Tiffany Lam’s Objection to the United States’ Motion
for Order Authorizing Application of Defendant Martin Kao’s Bond Deposit to
Payment of Defendant’s Special Assessment and Restitution (ECF No. 149).
Because Defendant’s bail deposit consists of property owned by Defendant, the
Court should overrule Lam’s objection and grant the government’s motion to apply
the deposit to criminal penalties ordered as part of the judgment in this matter.
I. Factual Background
After being arrested pursuant to warrant and complaint, on October 8, 2020,
Defendant Martin Kao posted a $2 million secured bond, all by way of cash
deposit. At the time of posting the bond, Defendant filed a notarized “Affidavit of
Cash Bail,” in which he stated that “the $2,000,000.00 cash deposited as bail on
the foregoing bond is owned by me and is to be returned to me . . . upon
exoneration.” ECF Nos. 14 (sealed version), 150 (redacted unsealed version)
(emphasis added). The receipt issued by the Clerk’s Office reflects that the
“Payer” is Defendant. Id.
On May 6, 2021, a grand jury returned an indictment charging Defendant
with three counts of wire fraud, in violation of 18 U.S.C. § 1343, and five counts of
Case 1:21-cr-00061-LEK Document 154 Filed 02/27/25 Page 3 of 12 PageID.1327
money laundering, in violation of 18 U.S.C § 1957. (ECF No. 21.) On September
7, 2022, Defendant pled guilty to all counts without a plea agreement. (ECF No.
76.)
On August 5, 2024, the United States filed the motion at issue, pursuant to
28 U.S.C. § 2044, requesting that the Court order that the $2,000,000.00 cash bail
be applied to Defendant’s criminal penalties upon Defendant’s surrender for
service of any term of imprisonment imposed by the Court (the “Turnover
Motion”). (ECF No. 132.)
On February 13, 2025, Defendant was sentenced to 87 months imprisonment
and, in relevant part, ordered to pay restitution in the amount of $12,841,490.00
and a special assessment of $800.00. 1 On the same day, at the hearing on the
Turnover Motion—approximately six months after the Turnover Motion was
filed—an attorney for Defendant’s wife, Tiffany Jennifer Lam, appeared and filed
an Objection to the Turnover Motion (the “Objection”). (ECF No. 149.)
In her Objection, Lam asserts that the $2 million cash bail was withdrawn on
October 6, 2020 from a Merrill Lynch account ending in 2641 (“ML2641”), and
that such account contained $3,000,000.00 at the time of the withdrawal. (ECF
No. 149 at 4-5.) Lam claims that she has an interest in the $2,000,000.00 because
1
The Court reserved determination as to whether additional restitution will be
imposed in favor of PacMar f/k/a Navatek.
2
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ML2641 was part of a purported “marital estate.”2 Id. at 3. Specifically, Lam
claims that she has an ownership interest in “approximately $1,500,000” of the $2
million bail because ML2641 held $3 million at the time the bail money was
withdrawn. Id. at 7.
A review of records relating to ML2641 reveal that ML2641 was held solely
in the name of Defendant; it was not a joint account with Lam. See Exhibit A at
BOA-317-308-DOJ-0000001 (signature card for ML2641 identifying solely
Defendant as owner); MLPFS-00202-004-DOJ-0000135 (identifying ML2641
account as “single” ownership).
II. Argument
Pursuant to 28 U.S.C. § 2044:
On motion of the United States attorney, the court shall
order any money belonging to and deposited by or on
behalf of the defendant with the court for the purposes of
a criminal appearance bail bond (trial or appeal) to be
held and paid over to the United States attorney to be
applied to the payment of any assessment, fine,
restitution, or penalty imposed upon the defendant. . . .
This section shall not apply to any third party surety.
28 U.S.C. § 2044.
2
Lam repeatedly refers to a purported “Marital Agreement” that makes all property
joint property, but that appears to refer merely to an alleged informal
understanding between Lam and Kau, and not a written agreement. See ECF No.
149-1 ¶ J.
3
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For the reasons below, Lam’s argument, that some portion (allegedly $1.5
million of the $2 million bail money) belongs to her and is thus not subject to
turnover, fails.
A. The government has shown, by a preponderance of the evidence,
that the $2 million belongs to Defendant.
When evaluating a Section 2044 turnover motion, most courts that have
addressed the issue have held that the government must prove, by a preponderance
of the evidence, that the posted bond money belongs to the defendant. See United
States v. Hills, No. 1:16-CR-329, 2022 WL 1127888, at *3 (N.D. Ohio Apr. 15,
2022) (collecting cases); United States v. Srithongrung, No. 4:19-CR-00752-7,
2023 WL 2232023, at *1 (S.D. Tex. Feb. 22, 2023).
In determining whether money belongs to a defendant, courts have found
that a defendant’s signing of the appearance bond as the owner of the posted
property is strong evidence of ownership. See Hills, 2022 WL 1127888, at *4
(“defendants’ representations under oath that they were the sole owners of the
property offered to secure the bond is strong evidence that money deposited by
each defendant belongs to them”); Srithongrung, 2023 WL 2232023, at *1
(cashier’s check and affidavit are compelling evidence that money belonged to
defendant); see also United States v. Bell, Cr. No. 20-2887, 2025 WL 319241, at
*3-4 (S.D. Cal. Jan. 21, 2025) (ordering turnover where defendant controlled bank
account that money was drawn from and receipt identified defendant as remitter).
4
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Here, Defendant signed an affidavit attesting that “the foregoing bond is
owned by me and is to be returned to me,” and the receipt from the Clerk’s Office
lists the “payer” as Defendant. (ECF Nos. 14, 150.) Further, if as Lam claims, the
bond was drawn from ML2641, it is significant that ML2641 was an individual
account held solely in Defendant’s name. Ex A at BOA-317-308-DOJ-0000001
(signature card for ML2641 identifying solely defendant as owner); MLPFS-
00202-004-DOJ-0000135 (identifying ML2641 account as “single” ownership).
Lam ignores the above and claims that she is entitled to “approximately $1.5
million” of the $2 million dollar bond because ML2641 was part of a purported
marital estate and held $3 million at the time the bond money was withdrawn.
Lam’s self-serving affidavit is insufficient to establish that any amount of the bond
belongs to her, in light of the single ownership of the account in Defendant’s name
and Defendant’s affidavit. Further, as discussed below, even if Lam were able to
establish a marital interest in the property, there is absolutely no basis to claim that
75% of the $2 million posted belongs to her. 3
Lam’s Objection cites to United States v. Gonzales, and other district court
cases, but such cases show only that, under certain factual circumstances – which
3
Lam’s assertion that she was the person who delivered the cashier’s check, ECF
No. 149 at 4, is immaterial. That only shows that the bond was posted “on behalf
of the defendant,” when viewed in context with other evidence. Hills, 2022 WL
1127888, at *4-5 (rejecting argument that third party that physically posted the
bond necessarily had an ownership interest).
5
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are not present here – a family member may be considered a third-party surety, and
under such circumstances, bail money would not be available for turnover pursuant
to 28 U.S.C. § 2044. However, all cases cited by Lam are inapposite. See
Gonzales, Cr. No. 11-80211, 2013 WL 654918 (S.D. Fla. Feb. 21, 2023) (where
bond co-signed by objecting third-party and others, government could not show
that defendant owned the funds by merely relying on the fact that the defendant
earned a substantial income from fraud scheme); United States v. Arnold, Cr. No.
18-30, 2020 WL 957415 (N.D. Miss. Feb. 27, 2020) (wife was third party surety
where deposit receipt listed wife as the “Payer” and no evidence that money
belonged to defendant); United States v. Equere, 916 F. Supp. 450 (E.D. Pa. 1996)
(government agreed that bail money belonged to defendant’s brother); United
States v. Sparger, 79 F.Supp.2d 714 (W.D. Tex. 1999) (attorney was third party
surety when he used his own money to post bond); United States v. Salyer, Cr. No.
10-61, 2014 WL 412088 (E.D. Cal. Feb. 3, 2014) (undisputed that sister’s trust was
the source of the bail money and that those funds were deposited with the
understanding that they would be returned to the trust upon exoneration of the
bond).
In light of Defendant’s affidavit attesting to ownership of the $2 million cash
bail posted and that the money should be returned to him upon exoneration of the
bond, and the fact that the money was withdrawn from an account owned solely by
6
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Defendant, the government has established by a preponderance of the evidence that
the money “belongs” to Defendant. Therefore, Lam’s objection should be
overruled in its entirety.
B. Lam cannot establish a marital interest in the $2 million.
Without explicitly acknowledging the account from which the bail money
was withdrawn (ML2641) was not jointly held, Lam—who is still married to
Defendant—relies on cases relating to divorces to claim that (1) she should be
entitled to 50% of the account balance of ML2641 ($3 million) at the time the $2
million bail money was withdrawn because ML2641 was part of a purported
marital estate, and (2) that this Court should find that her alleged $1.5 million
interest (50% of $3 million) should attach to the $2 million bond posted, and not
the remaining $1 million in the account that the parties supposedly subsequently
spent on attorneys’ fees. (ECF No. 149 at 7.)
State divorce law principles have no application here. In United States v.
Real Prop. Located at 148 Maunalanikai Place in Honolulu, Hawaii, a civil
forfeiture action, the court analyzed whether a spouse has a vested marital interest
in property held solely in the name of their spouse. United States v. Real Prop.
Located at 148 Maunalanikai Place in Honolulu, Hawaii, No. CIV. 07-00049 HG
LEK, 2008 WL 3166799, at *7-8 (D. Haw. Aug. 6, 2008). Upon its review of
Hawaii divorce law, the court held that a “marital estate” can be determined only at
7
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the time of the conclusion of the evidentiary portion of a divorce trial. Id. (citing
Malek v. Malek v. Malek, 8 Haw.App. 377, 380 (1989) and Haw. Rev. Sat. § 580-
47, the statute governing division of property in a divorce). Further, the court
determined that divorce law principles governing property distribution apply only
in the event of divorce. Id.
Here, no divorce proceeding is pending. Lam cannot rely on divorce law to
determine that she has a vested interest in money withdrawn from a bank account
held solely in Defendant’s name, and then posted with an affidavit attesting that
Defendant is the owner and that the property should be returned to him. 4 See Real
Prop. Located at 148 Maunalanikai Place in Honolulu, Hawaii, 2008 WL
3166799, at *8 (under Hawaii law, and law of many other states, equitable
distribution of marital property in a divorce does not confer ownership interest
independent of the divorce); In re Radinick, 419 B.R. 291, 294 (Bankr. W.D. Pa.
2009) (marital interest vests only upon judgement of divorce under New York and
New Jersey law); United States v. Abell, 985 F.3d 111, 114 (1st Cir. 2021) (under
4
Even if the account were jointly held, under Hawaii law, a debtor presumptively
holds the entire joint bank account. Traders Travel Int'l, Inc. v. Howser, 69 Haw.
609, 615 (1988) (distinguishing a joint account from property held as tenancy-by-
the-entirety and rejecting debtor’s wife assertion that her interest in joint account
could not be garnished); Haw. Rev. Stat. § 412:4-105. Further, here, the money
being sought no longer resides in a bank account; it was withdrawn from the
account and deposited by Defendant with the Court, along with a verification that
the money belonged to him.
8
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Massachusetts law, defendant’s wife did not have vested property interest in
account defendant held individually, so she lacked standing to challenge
garnishment order against defendant’s account to pay restitution obligation).
Even if this Court were to find that Lam has an interest in the $2 million
bond – which it cannot – Lam’s assertion that she is entitled to 75% of the bond
money is meritless. Although it is possible that, in a divorce proceeding, a court
could evaluate various equitable factors and determine that Lam has an interest in
an account held solely in Defendant’s name, no basis exists to believe that such an
award would be a 50% interest. 5 See Balogh v. Balogh, 134 Haw. 29, 40 (2014)
(no fixed percentage for determining division of marital assets). Lam has not
presented any evidence for this Court to find such an interest, and it would be
wholly inappropriate for this Court to engage in such speculative analysis given
that no divorce proceeding exists to give rise to a “marital estate” that can be
distributed.6
5
Even under Lam’s fiction, her math does not add up. If, as Lam asserts, the $3
million in the account immediately before withdrawal of the $2 million bail was
jointly owned, then each spouse owned $1.5 million, and therefore $1.5 million of
the $2 million bail was owned by Defendant. Alternatively, if Lam’s fiction
involves a continuing 50% interest in property held by the Kao, then she owned
only $1 million of the $2 million bail.
6
Furthermore, any such analysis would require consideration of all property owned
by Defendant and/or Lam to ascertain the entirety of the purported “marital estate,”
not merely the contents of one account, and to determine whether Defendant had
dipped into Lam’s purported 50% of the “martial estate.”
9
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III. Conclusion
Based on the foregoing, the government respectfully requests that the Court
enter an order authorizing the Clerk of Court to apply the $2,000,000 cash bond
previously posted by Defendant and presently held by the Clerk of Court to
payment of Defendant’s criminal penalties.
DATED: February 27, 2025, at Honolulu, Hawaii.
KENNETH M. SORENSON
Acting United States Attorney
District of Hawaii
/s/ Sydney Spector
By ____________________________
CRAIG S. NOLAN
SYDNEY SPECTOR
Assistant U.S. Attorneys
Attorneys for Plaintiff
UNITED STATES OF AMERICA
10
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CERTIFICATE OF SERVICE
I hereby certify that, on the date noted below, a true and correct copy of the
foregoing was served on counsel of record using the Court’s CM/ECF electronic
filing system.
DATED: February 27, 2025, at Honolulu, Hawaii.
/s/ Sydney Spector
U.S. Attorney’s Office
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