Wake Forest Law Review

Weekly Roundup: 9/25-9/29
By: Chase Stevens & Robert Tucci

Brown v. Commissioner Social Security Administration
          In this administrative law case, the claimant appealed the district court’s decision affirming the Commissioner of Social Security’s denial of the claimant’s request for disability insurance benefits. The Fourth Circuit vacated the judgment of the district court and remanded the case, finding that the Administrative Law Judge improperly evaluated the medical opinion evidence and failed to heed the “treating physician rule,” which provides that deference is given to the medical opinion of a physician who has examined the claimant over those who have not.

United States v. Marshall
          In this criminal case, the defendant argued that he was entitled to the release of substitute assets he forfeited after conviction, which he needed needed to finance the appellate counsel of his choice. The Fourth Circuit denied the defendant’s appeal, finding that the Constitution requires only that a criminal defendant be represented by adequate, court-appointed counsel and that a defendant may not use property connected to a crime to fund counsel of his choice.

Di Biase v. SPX Corporation
          In this civil case, the plaintiffs sought a preliminary injunction to enjoin SPX from changing its healthcare plan, arguing that SPX’s alternative healthcare plan breached the plaintiffs’ previous settlement agreements by not being “substantially equivalent” to their current healthcare plan. The Fourth Circuit affirmed the district court’s denial of the injunction, finding that the district court did not abuse its discretion in determining that plaintiffs had not met their burden that they would likely succeed on the merits of their claim.

By Adam McCoy

On Monday, September 25, 2017, the Fourth Circuit issued a published opinion in a criminal case, United States v. Marshall.  Andracos Marshall (“Marshall”) was found guilty of several crimes including conspiracy to commit money laundering.  The Government filed motions for forfeiture and district court entered an order for forfeiture in amount of $51,300,000, including $59,000 in untainted funds in Marshall’s credit union account as substitute assets.  Marshall filed a motion to use the $59,000 in untainted funds to hire appellate counsel.  The Fourth Circuit denied his motion to use forfeited funds to hire appellate counsel.

Facts and Procedural History

In 2014, the Government indicted Marshall for several crimes, including conspiracy to distribute a controlled substance, possession of a controlled substance with intent to distribute, and conspiracy to commit money laundering.  In the indictment, the Government indicated it would seek forfeiture of substitution assets if property from Marshall’s crimes could not be found.  Under 21 U.S.C. § 853(a), the Government may seek forfeiture of tainted property connected to certain felonies, and § 853(p) allows forfeiture of substitute property if the tainted property is not available.  Marshall was eventually convicted on all counts, and the Government sought forfeiture of $108 million of criminally obtained proceeds.  The district court entered an order of forfeiture for $51,300,000.  In a second motion for forfeiture, the Government requested forfeiture of $59,000 in Marshall’s credit union account as substitute assets under § 853(p).  The district court granted the motion, but the Fourth Circuit stayed it until the Court could hear Marshall’s motion to use the untainted $59,000 to hire appellate counsel.

Defendant Does Not Have Right to Forfeited Funds to Pay for Appellate Counsel

Marshall argues he has a Constitutional right to substitute assets forfeited after his conviction if the funds are needed for his appellate representation.  The Fourth Circuit relied on Supreme Court precedent regarding the right to appellate counsel to make its decision in this case.  The right to appellate counsel is statutory, not constitutional. However, courts have held that when right to appellate counsel is granted, counsel must be provided.  The Supreme Court did recognize in United States v. Gonzales-Lopez, 548 U.S. 140, 144 (2006) that defendants who do not require court-appointed counsel have the right to choose who will represent them.  However, the Supreme Court has never recognized a right to choose one’s counsel on appeal.  Even assuming Marshall had the right to choice of counsel on appeal, he still did not have right to use forfeited funds to hire appellate counsel.  In Caplin & Drysdale, Chartered v. United States, 491 U.S. 617 (1989), the Supreme Court held the Sixth Amendment right to counsel does not allow a defendant to use forfeited funds connected to the crimes charged to pay trial counsel’s fees after conviction.  The Court reasoned property connected to a crime that was forfeited became the Government’s property  “at the time of the criminal act giving rise to forfeiture.” Id. at 627.  The Supreme Court did allow access to untainted assets that were frozen pretrial and needed to hire an attorney. Luis v. United States, 136 S. Ct. 1083 (2016).  However, the focus of this decision was on the pretrial nature of the assets and their lack of connection to the crime.  The Court said the defendant still had a clear ownership of the assets because there was no conviction, as opposed to the post-conviction setting when forfeiture gives the Government a clear interest.

The Fourth Circuit used the Supreme Court’s approach to pretrial restrictions of untainted assets in Luis and the approach to post-conviction assets in Caplin & Drysdale to determine that Marshall could not use his forfeited untainted assets to hire appellate counsel.  The ability of defendants to use assets to pay for counsel depends on who clearly owns the property.  According to Luis, if the defendant clearly owns the property he has a right to use it to pay for his counsel of choice. 136 S. Ct. at 1091.  However, the Government takes title to forfeited property, including § 853(p) substitute property, at the time of conviction. 136 S. Ct. at 1101.  The Fourth Circuit applied this to mean Marshall’s substitute property, the $59,000 credit union funds, became the Government’s property when the district court issued the forfeiture order after Marshall’s conviction.  This means Marshall no longer owns the property.  The Fourth Circuit further held that the Government’s ownership of the property was enough to override Marshall’s Sixth Amendment right to use those funds to hire appellate counsel of his choice. 491 U.S. at 631.  Relying primarily on Caplin & Drysdale and Luis, the Fourth Circuit held the $59,000 forfeited untainted assets were the property of the Government, and therefore Marshall had no right to use them to hire his appellate counsel of choice.

Conclusion

The Fourth Circuit denied Marshall’s motion to use his forfeited funds to hire his appellate counsel of choice.

By John Van Swearingen

On January 24, 2017, the Fourth Circuit issued a published opinion in the criminal case United States v. Agyekum. In the United States District Court for the Southern District of West Virginia, Kofi Agyekum (“Appellant”) plead guilty to two counts of structuring transactions, forfeiting over $2,300,000 in cash assets. Appellant challenged his sentence on two grounds: first, that sentencing enhancements based on involvement in a drug conspiracy were not “relevant conduct” with respect to his structuring convictions, and second, that sentencing enhancements based on his role as a pharmacist did not constitute “relevant conduct” with respect to the same convictions. Additionally, Appellant contended that the district court did not adequately ensure that he understood the procedural protections waived in his plea agreement. The Fourth Circuit affirmed Appellant’s sentence, holding that the Appellant’s involvement in a drug conspiracy and role as a pharmacist were within the scope of “relevant conduct.” Additionally, Appellant adequately understood the waivers of rights involved with his plea agreement.

Facts and Procedural History

In October, 2012, Appellant and his wife opened A+ Care Pharmacy in Barboursville, West Virginia. Appellant had total control over the operations of the business. Appellant’s wife was the licensed pharmacist, but she operated solely under Appellant’s control.

A confidential informant (“CI”) involved in a 2014 oxycodone trafficking ring investigation notified federal investigators that he had been filling prescriptions at A+ Care Pharmacy since November 2012. The CI made several controlled buys under supervision of the investigating agents in which the Appellant charged the CI an abnormally high price to fill out-of-state oxycodone prescriptions, doctored receipts to avoid leaving a paper trail, and discussed permitting the purchase of oxycodone without a prescription.

The investigation uncovered that Appellant was regularly filling ten to eighteen prescriptions a week for an organized drug ring headquartered in Kentucky with operations throughout the southeast United States. In spring of 2014, Appellant began selling oxycodone to the head of the organization without a prescription for around $15 per pill, and on one occasion, accepted a vehicle as payment. A+ Care Pharmacy was the third largest distributor of oxycodone in the state, and the drug comprised 70% of its business.

During this time, Appellant opened numerous bank accounts with several different financial institutions around town. Appellant used multiple accounts to avoid making cash deposits of $10,000 or more, which are subject to federal reporting. From March to August, 2014, Appellant deposited almost $470,000 in accounts at five banks, never depositing more than $10,000 into a single account on a single day.

In August, 2014, investigating agents executed a search warrant at A+ Care Pharmacy, seizing 51,000 pills of oxycodone, $68,000 in cash hidden in the pharmacy’s office, over $440,000 in cash stored in two safe deposit boxes, and 20 bank accounts owned by Appellant. Over $2,300,000 in assets were seized. Appellant was arrested.

Appellant was indicted with conspiracy to illegitimately distribute oxycodone, aiding and abetting the illegitimate distribution of oxycodone, forty counts of money laundering, and eleven counts of structuring cash transactions to avoid reporting.

After six months in jail, Appellant agreed to plead guilty to two counts of structuring transactions, forfeit over $2,300,000 in assets, and waive the procedural rights to any future challenges to the forfeiture. Appellant initially refused the plea agreement because of the forfeiture term, but eventually acknowledged to the district court that he understood the forfeiture term and accompanying waiver and accepted the plea deal.

Appellant’s sentencing report included multiple enhancements, including two to which Appellant objected: (1) enhancement based on Appellant’s role as a “leader” or “manager” within the criminal drug conspiracy pursuant to U.S.S.G. § 3B1.1(c), and (2) enhancement based on Appellant’s abuse of a position of trust pursuant to U.S.S.G. § 3B1.3. Appellant’s objections centered on the assertion that neither the Appellant’s participation in the drug conspiracy nor his role managing a pharmacy constituted “relevant conduct” with respect to his transaction structuring convictions as outlined in U.S.S.G. § 1B1.3. Additionally, Appellant claims that the district court did not properly ensure that he understood the waiver of procedural protections involved in his plea deal.

A Leadership Position In A Conspiracy Was “Relevant Conduct” With Respect To Structuring Cash Deposits Arising Out Of That Conspiracy

Appellant’s argument centers on the belief that enhancements for “relevant conduct” are limited strictly to the behaviors associated with the convictions. Here, those convictions were for structuring bank transactions. Therefore, Appellant argues, the only applicable enhancements must arise from his conduct as a bank customer.

U.S.S.G. § 1B1.3(a) defines “relevant conduct” in the scope of sentencing more broadly than the conduct considered for criminal liability. See United States v. McVey, 752 F.3d 606, 610 (4th Cir. 2014). “Relevant conduct,” therefore, can include preparatory conduct, conduct to avoid detection, and other conduct related to the commission of the charged offense.

But for the illicit nature of Appellant’s participation in a drug trafficking conspiracy, Appellant would not have been receiving large cash payments on a regular basis. Additionally, Appellant only structured the transactions to avoid the reporting requirements that would have alerted federal authorities to the cash-intensive nature of his dealings. Therefore, the court noted, Appellant’s participation in the drug conspiracy was “relevant conduct” for the purpose of sentence enhancement. Thus, if Appellant was in a leadership position in the conspiracy, the sentence enhancement was appropriate.

Appellant was in sole operational control of A+ Care Pharmacy, and directed the pharmacy’s operations regarding the filling of out-of-state prescriptions, mandated the acceptance of cash only for oxycodone, set the price for oxycodone transactions based on risk, and advised members of the conspiracy to also acquire prescriptions for non-narcotic drugs in order to reduce suspicion. The district court, therefore, was proper in determining Appellant had a leadership role in the drug conspiracy, and the sentence enhancement was therefore appropriate.

Abuse Of The Position Of Pharmacy Manager Was “Relevant Conduct” With Respect To Structuring Cash Deposits Arising Out Of That Position

Appellant also challenges the sentence enhancement based on the abuse of his position managing a pharmacy – a position of public trust – because his role was not “relevant conduct” with respect to the structured transactions.

Having determined that the pharmaceutical operations were within the scope of “relevant conduct,” the court then considered whether Appellant was abusing a position of public trust. The purpose of the enhancement is to punish those “who take advantage of a position that provides them with the freedom to commit a difficult-to-detect wrong.” United States v. Brack, 651 F.3d 388, 393 (4th Cir. 2011). Additionally, the defendant must have some sort of relationship to his victim that involves trust. United States v. Caplinger, 339 F.3d 226, 236 (4th Cir. 2003).

Appellant exploited his position by purchasing oxycodone from a legal distributor at a level that exceeded his actual lawful uses. Additionally, Appellant took advantage of his position as both a husband and a manager to force his wife to fill prescriptions for a drug trafficking ring. Appellant doctored records to conceal his activities from the West Virginia Board of Pharmacy. Thus, Appellant was using his unique position managing a pharmacy in order to facilitate the drug trafficking operations – “relevant conduct” underlying the structured transactions.

Appellant Fully Understood His Waiver Of Rights With Respect To Forfeiture

Appellant contended that the district court failed to ensure that he fully understood the rights he waived with respect to his asset forfeiture. However, the record on appeal included several exchanges in open court wherein Appellant (1) claimed multiple times to understand the terms of the plea agreement, (2) contested the plea agreement because he did not agree to the scope of the forfeiture term, and (3) subsequently agreed to the forfeiture term and plea agreement after discussing his situation with his lawyer. Therefore, Appellant’s assertion was wholly unsupported by the record.

Disposition

The Fourth Circuit affirmed both challenged sentencing enhancements and denied Appellant’s challenge to his waiver of rights regarding the forfeiture term of the plea agreement.