United States District Court, W.D. North Carolina, Charlotte Division
Cogburn, Jr. United States District Judge
MATTER is before the Court on the United States of
America's Motion (#121), pursuant to Fed. R. Crim. P.
32.2, requesting that this Court enter a $244, 000, 000
forfeiture Money Judgment against Defendant. The money
judgment figure represents a conservative estimate of the
proceeds of the mail and wire fraud conspiracy for which the
Jury returned a Verdict of guilty, such figure calculated
based on trial exhibits and an outstanding restitution loss
calculation by the Special Master in this action. For good
cause shown and based on the preponderance of the evidence,
this Court will GRANT the Motion. In support of granting the
Motion, the Court FINDS AS FOLLOWS:
October 24, 2014, following a multi-year investigation, a
Grand Jury returned an Indictment (Doc. 1) against Defendant,
charging him with conspiracy to commit mail and wire fraud,
and substantive mail and wire fraud offenses, all in
violation of 18 U.S.C. §§ 371, 1349, 1341, and
1343. The charges stemmed from Defendant's conduct as
leader of the massive Rex Venture Group/ZeekRewards Ponzi
scheme. As set forth in the Indictment, the Grand Jury found
probable cause that the offenses generated proceeds,
“including but not limited to the sum of approximately
$850 million in proceeds.” Indictment at Doc. 1, Page
11, ¶ 52.
a lengthy trial of this matter, a Jury returned a Verdict
(Doc. 108) of guilt on all charges. At trial, the Government
introduced voluminous evidence on the offenses and proceeds
of the conspiracy and scheme, including but not limited to
the following evidence:
• Government's Exhibit 4H, which identifies
“Total Money In” to the conspiracy of $932, 215,
379.19 and “Total Money Out” of $588, 955,
432.61, for a “Net Money Gain” of $426, 260,
• Government's Exhibit 84A, which identifies that
Paul Burks personally profited by at least $10, 102, 400 as a
result of the conspiracy.
the Verdict, the Special Master, who is also the Receiver in
a related action initiated by the Securities and Exchange
Commission, filed an Amended Report (Doc. 117) in this case
wherein he recommends restitution in the amount of $244, 000,
the Grand Jury finding of probable cause, the trial evidence,
and the sentencing materials all support issuance of the
requested Money Judgment in this case.
constituting or derived from conspiracy, mail, and wire fraud
proceeds are subject to civil forfeiture under 18 U.S.C.
§ 981(a)(1)(C). 18 U.S.C. § 981(a)(1)(C) (rendering
proceeds of specified unlawful activity subject to
forfeiture); 18 U.S.C. § 1956(c)(7)(A) (defining
specified unlawful activity to include racketeering
activity); 18 U.S.C. § 1961(1) (defining racketeering
activity to include offenses in violation of Sections 1341
and 1343, and conspiracy to commit same). Further, 28 U.S.C.
§ 2461(c) renders the civil forfeiture provisions of
Section 981(a)(1)(C) applicable in this criminal forfeiture
action. Finally, a money judgment for the proceeds of
conspiracy and fraud is authorized under Fed. R. Crim. P.
Government's burden of proof on forfeiture is
preponderance of the evidence. United States v.
Cherry, 330 F.3d 658, 669 (4th Cir. 2003); United
States v. Tanner, 61 F.3d 231, 233 (4th Cir. 1995). The
Court's “determination may be based on evidence
already in the record, including [ . . . ] any additional
evidence or information submitted by the parties and accepted
by the court as relevant and reliable.” Fed. R. Crim.
P. 32.2(b)(1)(B); see also United States v. Farkas,
474 Fed.Appx. 349, 360 (4th Cir. 2013) (court may rely on
trial record to determine forfeiture). The Government may
satisfy the preponderance burden by both direct and
circumstantial evidence. United States v. St.
Pierre, 484 F.3d 75, 86 (1st Cir. 2007).
the government seeks a personal money judgment, the court
must determine the amount of money that the defendant will be
ordered to pay.” Fed. R. Crim. P. 32.2(b)(1)(A);
see also United States v. Butler, 578 Fed.Appx. 178,
182 (4th Cir. 2014) (district court must find nexus between
forfeiture calculation and crime). Proceeds include, not only
the proceeds generated by the conduct of the defendant
at-issue, but also any proceeds generated due to the
reasonably foreseeable conduct of co-conspirators. United
States v. Blackman, 746 F.3d 137, 144 (4th Cir. 2014)
(discussing proceeds calculation in conspiracy cases and also
noting that forfeiture is mandatory); United States v.
Jalaram, 599 F.3d 347, 351 (4th Cir. 2010) (discussing
proceeds calculation in conspiracy cases); United States
v. McHan, 101 F.3d 1027, 1043 (4th Cir. 1996)
(discussing vicarious liability).
case, the Government only seeks a $244, 000, 000 Money
Judgment, which is consistent with the amount of restitution
sought by the Special Master. And, although the $244, 000,
000 figure is more than the Government can trace directly to
Defendant personally, it is also substantially less than the
actual “Net Money Gain” figure of $426, 260,
121.22 for which Defendant could be held liable under the law
in this conspiracy case. Indeed, the trial testimony and
exhibits, as well as sentencing materials, addressed hundreds
of millions of dollars of gross proceeds obtained during the
course of the conspiracy. That trial evidence, ...