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ORDER GRANTING THE UNITED STATES' MOTION FOR ORDER AUTHORIZING… — PPP Attempt Conspiracy Legal Filings (Dkt. 156)

No. 1:21-cr-00061-LEK · Doc. 156 · Docket on CourtListener

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An order in United States v. Martin Kao, No. 1:21-cr-00061-LEK, in the U.S. District Court for the District of Hawaii, filed March 4, 2025 (Doc. 156), granting the United States' motion to apply Kao's $2 million bond deposit to his special assessment and restitution under 28 U.S.C. § 2044. The order recounts that Kao posted the cash bond on or about October 8, 2020 and signed an affidavit stating he owned the funds, and that an Amended Judgment imposed restitution of $12,841,490 and an $800 special assessment. Kao and third-party in interest Tiffany Jennifer Lam argued the funds were joint marital assets. The court finds by a preponderance of the evidence that the money belonged to Kao, citing the affidavit, account documents naming him as sole owner and the inapplicability of divorce law.

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Case 1:21-cr-00061-LEK Document 156 Filed 03/04/25 Page 1 of 9 PageID.1352

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAII

UNITED STATES OF AMERICA, ) CR NO. 21-00061 LEK-KJM
)
Plaintiff, ) ORDER GRANTING THE UNITED
) STATES’ MOTION FOR ORDER
vs. ) AUTHORIZING APPLICATION OF
) DEFENDANT’S BOND DEPOSIT
MARTIN KAO, ) TO PAYMENT OF SPECIAL
) ASSESSMENT AND
Defendant. ) RESTITUTION
________________________________ )

ORDER GRANTING THE UNITED STATES’ MOTION FOR ORDER
AUTHORIZING APPLICATION OF DEFENDANT’S BOND DEPOSIT
TO PAYMENT OF SPECIAL ASSESSMENT AND RESTITUTION

On August 5, 2024, the United States filed a Motion for Order Authorizing

Application of Defendant’s Bond Deposit to Payment of Special Assessment and

Restitution (“Motion”). ECF No. 132. Defendant Martin Kao (“Defendant”) filed

a Memorandum in Opposition on August 15, 2024 (“Opposition”). ECF No. 136.

The Court held a hearing on the Motion on August 19, 2024, at which time the

Court continued the hearing until after Defendant’s sentencing. ECF No. 137.

The Court held a further hearing on February 13, 2025. ECF No. 147. At

the hearing, the Court permitted Defendant’s spouse, Third-Party in Interest

Tiffany Jennifer Lam (“Lam”), to intervene for the limited purposes of the Motion.

Id. Lam filed her objection to the Motion during the hearing (“Lam Objection”).

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ECF No. 149. On February 27, 2025, the Government filed a response to Lam’s

Objection. ECF No. 154. That same day, Defendant filed a declaration. ECF No.

155.

After carefully considering the memoranda, applicable law, record in this

case, and arguments of counsel, the Court GRANTS the Motion for the reasons set

forth below.

DISCUSSION

I. 28 U.S.C. § 2044

In the Motion, the Government seeks an order authorizing application of

Defendant’s $2 million bond deposit for payment of his special assessment and

restitution, pursuant to 28 U.S.C. § 2044. Section 2044 requires the Court to order

a defendant’s bail bond to be held over and paid to the United States attorney to be

applied towards payment of any assessment, fine, restitution, or penalty, so long as

the posted bail money belongs to and was deposited by or on behalf of the

defendant:

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. The court shall not release any
money deposited for bond purposes after a plea or a verdict of the
defendant’s guilt has been entered and before sentencing except upon
a showing that an assessment, fine, restitution or penalty cannot be

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imposed for the offense the defendant committed or that the defendant
would suffer an undue hardship. This section shall not apply to any
third party surety.

28 U.S.C. § 2044.

“Section 2044 codifies the discretion courts have long exercised, to pay, on a

proper motion, bond or bail money to the parties with a legally established superior

claim to it.” United States v. Higgins, 987 F.2d 543, 546 (8th Cir. 1993) (other

citation omitted) (citing United States v. Rubenstein, 971 F.2d 288, 294 (9th Cir.

1992)). “[T]he applicability of Section 2044 requires two showings: (1) that the

money was deposited by the defendant or on the defendant’s behalf; and (2) that

the money belongs to the defendant.” United States v. Hughes, No. 3:15-CR-11,

2017 WL 2462725, at *1 (S.D. Tex. June 6, 2017). As to the second prong, the

burden rests with the government to establish by a preponderance of the evidence

that the funds in question belonged to the defendant and were not deposited by a

third-party surety. See, e.g., United States v. Hills, No. 1:16-CR-329, 2022 WL

1127888 at *3 (N.D. Ohio April 15, 2022) (collecting cases).

II. Affidavit of Cash Bail

Defendant was arrested on September 30, 2020. ECF Nos. 1, 9. On or

about October 8, 2020, Defendant posted a $2 million secured bond, all by way of

a cash deposit, which is presently held by the Clerk of the Court. ECF Nos. 14,

150. Defendant also signed a notarized Affidavit by Owner of Cash Bail (“Bail

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Affidavit), in which he represented to the Court that he owned the $2 million

deposited as bail, and that the $2 million was to be returned to him upon any bond

exoneration:

AFFlDA VIT BY OWNER OF CASH BAIL

1, Martin Kao on oath say that l reside at ---------

and 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 at the above address upon exoneration of this bond.

1n compliance with the regulations issued by the Internal Revenue Service of the Department of

- 19
the Treasury for the Internal Revenue Cod(} Section 6050l(g), l hereby submit the following:

Social Security Number

Method of ID: µ / ,[), -; v<v-_1 { ,',a..A~
Date of Birth 7 :1

ID Number

Signature of owner of cash security

ECF No. 150.

Defendant pled guilty on September 7, 2022, ECF Nos. 76, 77, and was

subsequently sentenced on February 13, 2025. ECF No. 146. The district court

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entered an Amended Judgment on February 24, 2025, which imposed restitution of

$12,841,490 and an $800 special assessment. ECF No. 151.

Notwithstanding Defendant’s Bond Affidavit, Defendant argues that (i) the

Government failed to identify the source of the posted money or confirm the

absence of third-party claims to the money, and/or (ii) the posted funds are joint

marital assets not subject to § 2044. ECF No. 136 at 3; ECF No. 155.

III. A Preponderance of the Evidence Shows that the Bail Funds
Belong to Defendant

Defendant and Lam claim that the $2 million used to pay for Defendant’s

secured bond constitutes joint marital assets that are not subject to turnover to the

United States Attorney. Lam states under oath that she withdrew the $2 million

from a Merrill Lynch account, which she and Defendant considered to be a joint

marital asset. ECF No. 149-1 (“Martin and I agreed that all our financial assets,

including . . . all our joint and individual bank and financial accounts . . . were joint

marital assets[.]”). Defendant subsequently filed a substantially similar declaration

containing the same statement. ECF No. 155 (“Tiffany and I agreed that all our

financial assets, including . . . all our joint and individual bank and financial

accounts . . . were joint marital assets[.]”).

As a starting point, many courts have found that a defendant’s signing of an

appearance bond representing his ownership of the posted bond property as

sufficient evidence of such ownership. See Hills, 2022 WL 1127888 at *4 (finding
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each defendant’s sworn representations that they were the sole owners of the

property securing the bonds as strong evidence of each defendant’s ownership in

the absence of any contrary claim); United States v. Srithongrun, No. 4:19-CR-

00752-7, 2023 WL 2232023, at *1 (S. D. Tex. Feb. 22, 2023) (finding a cashier’s

check and bond affidavit compelling evidence that deposit belonged to defendant

absent any evidence of third party ownership); United States v. Bell, No.

20CR2887-WQH, 2025 WL 319241, at *5 (S.D. Cal. Jan. 21, 2025) (ordering

turnover pursuant to § 2044 notwithstanding spouse’s community property claim).

Here, the Court looks beyond solely the Bond Affidavit to resolve Defendant and

Lam’s arguments that the funds are joint marital assets.

In addition to the Bond Affidavit, the Government submits the opening and

other documents for the Merrill Lynch account, which identify Defendant, and

only Defendant, as the account owner. ECF No. 154-1. Defendant’s and Lam’s

declarations do not dispute that the account was held solely by Defendant. Instead,

they assert that, as part of their marital agreement, they considered this account to

be joint marital property. Nevertheless, even if the Court were to consider the

account a joint account in spite of the Bond Affidavit and account documents

showing otherwise, Defendant would be entitled under Hawaii law to all deposits

in the account. Haw. Rev. Stat. § 412:4-105 (“Any deposit account held in the

names of two or more persons may be paid, on request and according to its terms,

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to any one or more of the persons.”). For this reason, each of the cases Lam relies

upon is readily distinguishable. See United States v. Gonzalez, No. 11-CR-80211,

2013 WL 654918, *5 (S.D. Fla., Feb 21. 2023) (bond was co-signed by third

parties, precluding a court finding that the funds belonged to the defendant);

United States v. Arnold, Cr. No. 18-30, 2020 WL 957415, *2-3 (N.D. Miss. Feb.

27, 2020) (deposit receipt identified wife as “Payer” and there was no evidence of

defendant’s ownership); United States v. Equere, 916 F. Supp. 450, 453 (E.D. Pa.

1996) (defendant’s brother, not the defendant, posted bail); United States v.

Sparger, 79 F.Supp.2d 714, 719 (W.D. Tex. 1999) (bail money was posted by

defense counsel and thus did not belong to defendant); United States v. Salyer, Cr.

No. 10-61, 2014 WL 412088, *3, 5 (E.D. Cal. Feb. 3, 2014) (it was clear that the

“cash posted” was “eventually provided” by defendant’s sister).

Further, in response to Lam’s arguments that Hawaii law regarding division

of marital assets in a divorce proceeding precludes a finding that Defendant owns

the funds, the Government correctly points out that Hawaii divorce property

distribution case law does not apply in here. See, e.g., United States v. Real Prop.

Located at 148 Maunalanikai Place in Honolulu, Haw., No. CIV. 07-00049 HG

LEK, 2008 WL 3166799, at *8 (D. Haw. Aug. 6, 2008) (acknowledging that,

under Hawaii divorce law, the “marital estate” can only be determined after an

evidentiary trial). Moreover, divorce law principles governing property

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distribution “only apply to the parties to the divorce action.” Id. For that reason,

Lam’s cited cases are inapposite. See Collins v. Wassell, 133 Haw. 34, 42, 323

P.3d 1216, 1224 (2014) (discussing the partnership principles that provide

“guidance for family courts to use in dividing property upon divorce”); Gussin v.

Gussin, 73 Haw. 470, 483, 836 P.2d 484, 486 (1992) (likewise acknowledging that

“in divorce proceedings regarding division and distribution of the parties’ estate”

the court is guided by partnership principles). There being no divorce case

pending or complete, Lam cannot rely on divorce law to make a claim to the

Merrill Lynch account held solely in Defendant’s name.

Taking into account all of the information the parties have submitted, and

considering (i) Defendant’s Bail Affidavit attesting to ownership of the $2 million

cash bail and asserting that it should be returned to him upon exoneration; (ii) the

account documents identifying Defendant as the sole owner of the account from

which the bond was paid; and (iii) the inapplicability of divorce law principles of

marital assets to this criminal proceeding, the Court finds by a preponderance of

the evidence that Defendant’s $2 million cash bond was deposited on the

defendant’s behalf with money belonging to Defendant. Accordingly, the Court

GRANTS the Motion and ORDERS the $2 million be applied to the satisfaction of

Defendant’s criminal penalties, including his special assessment and/or order of

restitution.

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IT IS SO ORDERED.

DATED: Honolulu, Hawaii, March 4, 2025.

United States v. Kao, Crim. No. 21-00064 LEK-KJM; Order Granting the United States’ Motion
for Order Authorizing Application of Defendant’s Bond Deposit to Payment of Special
Assessment and Restitution

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