United States District Court, C.D. Illinois, Springfield Division
SUE E. MYERSCOUGH, District Judge.
Currently pending are Defendant Gregory Toran's Motion to Release Funds Held in Escrow for Gregory Toran (d/e 38) and Supplemental Motion to Release Funds Held in Escrow for Gregory Toran or, in the Alternative, Motion for Leave to Withdraw (d/e 56). The Motions are granted in part and denied in part. The Government has shown probable cause to believe that all of the funds held in escrow related to the South Halsted properties and $69, 381.32 of the funds held in escrow related to the Vanderpoel property are subject to forfeiture. Therefore, the Court will order the release of only $49, 555.38 of the escrowed funds.
In September 2013, a grand jury indicted Toran on eight charges, including conspiracy to commit mail fraud and health care fraud, as well as the substantive charge of mail fraud. Tina M. Kimbrough was also indicted.
IBT Transportation, L.L.C., provides non-emergency transportation services to patients. Toran and Kimbrough were owners of all membership interest issued for IBT Transportation. The Indictment alleges that between December 1, 2005 and June 2011, Toran and Kimbrough set, implemented, and enforced policies and procedures at IBT Transportation to defraud Medicaid by submitting claims (through the Illinois Department of Health and Family Services (HFS)) for services that were either not rendered, not rendered to the extent claimed, or that included claims for mileage well in excess of that actually driven.
The Indictment also alleges that in August 2010 Toran and Kimbrough were made aware that IBT Transportation had been paid for services not rendered in 2010 in the amount of $476, 172. Toran allegedly notified HFS that IBT Transportation was only overpaid $224, 680.73 and kept the remainder of the money. Toran and Kimbrough also allegedly continued to submit claims for services not rendered or not rendered to the extent billed. In all, Toran and Kimbrough allegedly defrauded the Medicaid program of at least $4 million.
The Indictment contains forfeiture allegations, seeking forfeiture of various bank accounts and real property that constitutes or is "derived, directly or indirectly, from gross proceeds traceable to the commission of the offenses, " including:
9544 South Vanderpoel Avenue, Chicago, Illinois
1450 West 112th Place, Chicago
28 Carrington Court, Hazel Crest, Illinois
5751 to 5759 South Halsted Street, Chicago (hereinafter referred to as 5751 South Halsted)
5741 South Halsted Street, Chicago
6978 West North Avenue, Chicago
1029 Des Plaines Avenue, Unit 503, Forest Park, Illinois
The Government also seeks forfeiture of substitute property if the property described above cannot be located, is transferred, is placed outside the jurisdiction of the court, is substantially diminished in value, or is commingled with other property which cannot be divided without difficulty. In addition, the United States seeks a $4 million personal money judgment against Toran and Kimbrough.
Following the return of the Indictment, the Government caused to be filed a lis pendens with the Cook County Recorder of Deeds regarding the properties subject to forfeiture. When Toran sought to sell the 5741 South Halsted, 5751 South Halsted (collectively referred to as the Halsted properties) and the Vanderpoel properties, the Government agreed to release its lis pendens so long as the proceeds of the sale were put in escrow with Toran's attorney. Specifically, in a letter dated November 7, 2013 and a letter dated February 7, 2014 to Toran's counsel, the Government agreed to release its lis pendens so long as an escrow of the funds was set up with defense counsel. See Letters (d/e 38-4, 38-5). Although the letters differ slightly, both provide that the money held will be available to pay any fines, restitution, civil penalties, damages, and costs resulting from a conviction on the conspiracy and mail fraud charges Toran faces. However, the escrowed funds would not be used for any other purpose unless agreed to by the parties or upon order of the Court. Toran netted $118, 936.70 on the Vanderpoel property and $205, 439.30 on the Halsted properties, for a total of $324, 376. See Def.'s Mot. ¶¶ 9, 10 (d/e 38).
Toran now seeks the release of $175, 000 of the funds he received upon the sale of the Vanderpoel and South Halsted properties so that he can mount an effective defense. This includes no less than $25, 000 for obtaining hardware and software to review the large amounts of electronic discovery and documents. Toran also indicates he needs the funds to pay his attorneys to prepare for a three-week trial, review documents, conduct the three-week trial, and for counsels' out-of-pocket expenses.
II. LEGAL STANDARD
In the Indictment, the Government seeks forfeiture under 18 U.S.C. § 982(a)(7). Section 982(a)(7) requires that the Court, when imposing a sentence on a person convicted of a Federal health care offense, order the person "to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from gross proceeds traceable to the commission of the offense." 18 U.S.C. § 982(a)(7).
Section 982(b)(1) specifically incorporates some of the forfeiture provisions in the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. § 853), including § 853(e), which allows the Government to secure a post-indictment, pre-conviction protective order to freeze assets. See 18 U.S.C. § 982(b)(1); United States v. Kirschenbaum, 156 F.3d 784 (7th Cir. 1998). Section 853(e) provides, in relevant part, as follows:
Upon application of the United States, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take any other action to preserve the availability of property described in subsection (a) of this section for forfeiture under this section-
(A) upon the filing of an indictment or information charging a violation... for which criminal forfeiture may be ordered... and alleging that the property with respect to which the order is sought, would, in the event of ...