United States v. John Paul Gosney, Jr.

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[DO NOT PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 22-12049

Non-Argument Calendar

____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

JOHN PAUL GOSNEY, JR.,

Defendant-Appellant.

____________________

Appeal from the United States District Court

for the Southern District of Florida

D.C. Docket No. 9:22-cr-80022-AMC-3

____________________

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2 Opinion of the Court 22-12049

Before LUCK, LAGOA, and BRASHER, Circuit Judges.

PER CURIAM:

John Paul Gosney appeals the district court’s denial of his

motion to vacate a restraining order on a bank account. We affirm.

I.

In February 2022, a grand jury charged several defendants,

including Gosney, with multiple criminal offenses in connection

with a scheme to submit false and fraudulent claims to Medicare

for reimbursement. The indictment gave notice that the govern-

ment would seek criminal forfeiture in connection with the

charged offenses. Specifically, the indictment stated that, upon

conviction, the defendants would forfeit property constituting or

derived from, directly or indirectly, gross proceeds traceable to

health care fraud, conspiracy to commit health care fraud and wire

fraud, and kickback offenses, as well as any property “involved” in

the money-laundering offenses and any property “traceable to”

such property. The indictment listed certain property subject to

forfeiture as a result of the charged offenses, which “include[d], but

[was] not limited to,” funds from four listed bank accounts and

three parcels of real property.

After filing the indictment, the government applied ex parte

for an order under 21 U.S.C. section 853(e)(1) and 18 U.S.C. section

982(b)(1) restraining all funds on deposit in an account at Valley

National Bank on which Gosney was a signatory. In support of its

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22-12049 Opinion of the Court 3

application, the government submitted the declaration of an FBI

agent setting forth the probable cause to restrain the funds in the

account. The account wasn’t specifically listed in the criminal for-

feiture section of the indictment but was mentioned elsewhere, in-

cluding a criminal count alleging conduct related to concealment

money laundering.

The district court granted the government’s request. Based

on the grand jury indictment, the district court concluded that

there was “probable cause to find that [the account] [was] subject

to forfeiture” upon Gosney’s conviction and thus that “the United

States [was] entitled to a protective order pursuant to 21 U.S.C.

[section] 853(e).” The district court entered a protective order re-

straining the account to preserve its availability for forfeiture.

Gosney moved to vacate the district court’s protective or-

der, arguing that the restraint on the account violated his Sixth

Amendment right to counsel of choice by denying him access to

the funds he needed to hire the counsel he wanted. Specifically,

Gosney asserted that the account wasn’t restrainable because it

wasn’t listed in the criminal forfeiture section of the indictment, so

neither the district court nor the grand jury had determined that

the account was traceable to a charged offense. Gosney also re-

quested that the district court grant him a pretrial hearing on the

traceability of the account to the crimes alleged in the indictment.

In opposing the motion, the government argued that the indict-

ment and agent declaration established the account as tainted prop-

erty subject to criminal forfeiture and that Gosney’s challenge was

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4 Opinion of the Court 22-12049

barred under the Supreme Court’s decision in United States v. Ka-

ley, 571 U.S. 320 (2014), as an impermissible attack on the grand

jury’s probable cause determination underlying the criminal

charges.

Following a hearing, the district court denied Gosney’s re-

quest to vacate outright the restraining order. But the district court

granted Gosney leave to make an ex parte showing of financial

need to determine whether he was entitled to a hearing to chal-

lenge the restraint. Based on our decision in United States v. Kaley,

579 F.3d 1246, 1252 (11th Cir. 2009) (“Kaley I”), the district court

found that Gosney wasn’t entitled to a pretrial hearing unless he

showed that the asset restraint effectively prevented him from hir-

ing his counsel of choice. It permitted Gosney to attempt to make

such a preliminary showing by submitting documentary evidence

of financial hardship.

Gosney filed financial information ex parte as ordered. But

he “indicated that he would not testify about his finances at a future

adversarial hearing.” The district court ordered Gosney to file a

notice indicating whether he intended to meet his burden to show

financial need by a preponderance of the evidence at an adversarial

pretrial hearing. In response, Gosney asserted that only he had suf-

ficient personal knowledge about his finances and that he wouldn’t

testify in open court without a grant of use immunity.

The district court denied Gosney’s motion to vacate the re-

straining order, finding that a pretrial hearing on traceability of the

restrained funds to the charged offenses was “unwarranted.” The

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22-12049 Opinion of the Court 5

district court assumed (without deciding) that Gosney had estab-

lished financial hardship. But it determined that Gosney still wasn’t

entitled to a hearing under the four-part balancing test established

in Barker, which we applied to criminal asset restraints in United

States v. Bissell, 866 F.2d 1343, 1352 (11th Cir. 1989). This test in-

cludes four factors: “(1) the length of the delay before the defend-

ants received their post-restraint hearing; (2) the reason for the de-

lay; (3) the defendants’ assertion of the right to such a hearing pre-

trial; and (4) the prejudice the defendants suffered due to the delay

weighed against the strength of the United States’[] interest in the

subject property.” Kaley I, 579 F.3d at 1254.

As to the first Barker factor, the district court noted that,

“[i]n the context of asset restraints, the relevant length of delay is

the amount of time between when the restraint is imposed and

when the restraint would be reconsidered and resolved,” which the

district court calculated to be “between ten and eleven months.”

The district court found that “[a] delay of that length, although not

insignificant, is not so substantial as to clearly favor a pre-trial hear-

ing” and thus determined that this factor was “either neutral or

marginally weigh[ed] in Gosney’s favor.”

As to the second factor, the district court observed that the

case involved twenty-two charges against ten defendants “in con-

nection with a multimillion-dollar health care fraud conspiracy, in-

cluding charges of money laundering that implicate numerous en-

tities and bank accounts.” The district court noted that the discov-

ery was “massive,” as it involved “hundreds of thousands of

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6 Opinion of the Court 22-12049

documents and necessitat[ed] a detailed and developed discovery

protocol for use by a filter team.” The district court found that

because of “the complexities of this case, the extremely volumi-

nous discovery, and the expressed need for adequate preparation

on both sides,” the reason-for-delay factor was neutral.

As to the third factor, the district court found that it weighed

in Gosney’s favor because he timely moved to vacate the restrain-

ing order “one month after [it] was entered.”

As to the fourth factor, the district court conducted the

“more searching exposition and calculus” we required in Kaley I.

579 F.3d at 1258. In doing so, the district court explained that the

Supreme Court, in Kaley, distinguished between “(1) the grand

jury’s determination of probable cause to believe a defendant com-

mitted a crime and (2) the grand jury’s determination that the as-

sets subject to forfeiture are traceable to the charged crime” and

“made clear that only the latter determination . . . may be subject

to second-guessing.” “Conversely,” continued the district court,

quoting Kaley, “the former determination by the grand jury—that

probable cause exists to believe a defendant perpetrated the of-

fenses alleged based on the factual allegations supporting the grand

jury’s probable cause determination—is ‘conclusive’ at this stage,

i.e., not subject to ‘any review, oversight, or second-guessing’

pending resolution of the case.” After a thorough analysis, the dis-

trict court found that “Gosney’s arguments on the merits all re-

duce[d] to a claim that neither he nor his co-defendants committed

the charged crimes or obtained any significant amount of money

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22-12049 Opinion of the Court 7

from improper Medicare claims.” But, because that determination

“falls within the sole province of the grand jury under the Supreme

Court’s binding decision in Kaley,” the district court concluded that

Gosney had failed to show prejudice. Meanwhile, the government

had a “substantial interest in continuing to restrain [the account]

without any pre-trial hearing.” Accordingly, the district court de-

termined that this factor weighed “decidedly in favor of the

[g]overnment.”

Gosney timely appealed.

II.

We review a district court’s refusal to vacate an injunction

for abuse of discretion. CBS Broad. Inc. v. EchoStar Commc’ns

Corp., 532 F.3d 1294, 1299 (11th Cir. 2008). The legal conclusions

underlying the district court’s decision are reviewed de novo, and

factual findings are reviewed for clear error. Dillard v. Baldwin

Cnty. Comm’rs, 376 F.3d 1260, 1265 (11th Cir. 2004). We review

de novo issues of constitutional law and statutory interpretation.

United States v. Castro, 455 F.3d 1249, 1251 (11th Cir. 2006).

III.

Gosney argues that the district court erred in two ways.

First, he claims that the indictment didn’t permit the district court

to enjoin transfers from his account. Second, he argues that he was

entitled to a pretrial hearing on whether the restraint was constitu-

tional. We address each argument in turn.

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8 Opinion of the Court 22-12049

A.

Under 21 U.S.C. section 853(e), a district court may impose

pretrial restraints on property that would be subject to criminal for-

feiture in the event of a defendant’s conviction. Specifically, a dis-

trict court “may enter a restraining order or injunction” to preserve

such property for forfeiture “upon the filing of an indictment or

information charging a violation . . . for which criminal forfeiture

may be ordered under this section and alleging that the property

with respect to which the order is sought would, in the event of

conviction, be subject to forfeiture under this section.” 21 U.S.C. §

853(e)(1)(A). The Supreme Court has held that a pretrial restraint

of assets is constitutionally permissible when it is “based on a find-

ing of probable cause to believe that the assets are forfeitable.”

United States v. Monsanto, 491 U.S. 600, 615 (1989).

Gosney argues that the district court wasn’t authorized to

issue an order restraining his account because the account wasn’t

specifically listed in the non-exhaustive forfeiture allegations sec-

tion of his indictment. To support this argument, Gosney cites

United States v. Kaley, 677 F.3d 1316, 1327 (11th Cir. 2012) (“Kaley

II”), for the proposition that such an omission from this specific part

of the indictment is “fatal to the validity of the district court’s or-

der.” But Kaley II says no such thing. True, we noted that the

prosecution can’t restrain assets “[w]ithout the grand jury’s proba-

ble cause determination and the court’s approval.” Kaley II, 677

F.3d at 1327. But we made this statement in the context of “em-

phasizing that the prosecution cannot unilaterally restrain a

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22-12049 Opinion of the Court 9

defendant’s assets between the time of indictment and trial.” Id.

We never specified that a grand jury’s probable cause determina-

tion must appear in a particular part of the indictment, nor did we

preclude district courts from making their own post-indictment

probable cause determinations.

The indictment’s allegations, in conjunction with the FBI

agent’s declaration, established probable cause that the funds in the

account would be forfeitable upon Gosney’s conviction. Specifi-

cally, the FBI agent declared that investigators had identified more

than twenty million dollars in proceeds from Medicare contractors

tied to reimbursements for false and fraudulent claims submitted

to Medicare by the clinical laboratory used by Gosney and his co-

defendants. More than thirteen million dollars of these funds were

transferred to an account at JPMorgan. Between October 2020 and

February 2021, $1,954,100.00 was transferred in a series of forty-

one wire transfers from the JPMorgan account to a Wells Fargo

account on which Gosney was the sole signatory. In July 2021, ap-

proximately two million dollars was transferred from the Wells

Fargo account into the account at issue in this case. The indictment

identified Gosney as the owner of this account and charged him for

the two-million-dollar transfer, which the indictment described as

“proceeds of specified unlawful activity”—namely, “conspiracy to

commit health care fraud and wire fraud,” “health care fraud,” and

“receipt of kickbacks in connection with a [f]ederal health care pro-

gram.” In light of what was presented to the district court, com-

bined with the indictment’s clear notice that any property involved

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10 Opinion of the Court 22-12049

in or traceable to the charged offenses would be subject to criminal

forfeiture upon a defendant’s conviction, the district court’s re-

straint of the account was proper under section 853(e).

B.

On the issue of whether Gosney is entitled to a post-indict-

ment, pretrial hearing on the legality of the restraint on his prop-

erty, we’re bound by our decision in Bissell. In Bissell, we clearly

held that a defendant whose assets are restrained pursuant to a

criminal forfeiture charge in an indictment, rendering him unable

to afford counsel of choice, is entitled to a pretrial hearing only if

the balancing test in Barker is satisfied. 866 F.2d at 1353. Thus, we

must decide whether the district court correctly interpreted and ap-

plied the four factors of the Barker balancing test: “(1) the length

of the delay before the defendants received their post-restraint

hearing; (2) the reason for the delay; (3) the defendants’ assertion

of the right to such a hearing pretrial; and (4) the prejudice the de-

fendants suffered due to the delay weighed against the strength of

the United States’[] interest in the subject property.” Kaley I, 579

F.3d at 1254.

Gosney provides no legal argument as to the first three fac-

tors, which the district court found weighed neutrally or margin-

ally in Gosney’s favor. Gosney devotes the lion’s share of his brief

to challenging the district court’s finding that the fourth factor

weighed “decidedly in favor of the [g]overnment.” So the question

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before us is whether the district court erred in finding that Gosney

wasn’t unduly prejudiced by the restraint on his assets.

When a defendant’s assets are forfeitable as a result of crim-

inal conduct, a defendant has no Sixth Amendment right to use

those tainted funds to hire an attorney. See Caplin & Drysdale,

Chartered v. United States, 491 U.S. 617, 632 (1989). In Kaley, the

Supreme Court concluded that an asset restraint that deprives a de-

fendant of his Sixth Amendment right to retain counsel of his

choice is “erroneous only when unsupported by a finding of prob-

able cause.” 571 U.S. at 337 (emphasis omitted); see also Monsanto,

491 U.S. at 615 (holding that no constitutional violation occurs

where assets are restrained pretrial based on a finding of probable

cause that the assets are forfeitable).

The Kaley Court recognized that a pretrial asset restraint

must be supported by two probable-cause determinations: “There

must be probable cause to think (1) that the defendant has commit-

ted an offense permitting forfeiture, and (2) that the property at is-

sue has the requisite connection to that crime.” 571 U.S. at 323–24.

Kaley held that a defendant seeking to lift a pretrial asset restraint

has no right to a hearing to contest the first determination—the

grand jury’s finding of probable cause to believe that the defendant

committed the crimes charged. Id. at 322. The Court emphasized

the grand jury’s “singular role” in finding “probable cause neces-

sary to initiate a prosecution for a serious crime” and explained

that, because “a fundamental and historic commitment of our

criminal justice system is to entrust those probable cause findings

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12 Opinion of the Court 22-12049

to grand juries,” a defendant isn’t entitled to a “judicial re-determi-

nation of the conclusion the grand jury already reached.” Id. at 328.

Thus, only the second determination may be challenged before

trial. See id. at 331 n.9, 333. This is because “the tracing of assets

is a technical matter,” whereas the grand jury’s determination of

probable cause to support criminal charges is part of its “core com-

petence and traditional function” and thus “conclusive[].” Id. at

328, 331 & n.9 (quotation omitted). This distinction is consistent

with Kaley II, where we held that “a defendant who is entitled to a

pretrial due process hearing with respect to restrained assets may

challenge the nexus between those assets and the charged crime,

but not the sufficiency of the evidence supporting the underlying

charge.” 677 F.3d at 1327; see also Kaley, 571 U.S. at 324 (noting

that lower courts allow a defendant to challenge “whether proba-

ble cause exists to believe that the assets in dispute are traceable or

otherwise sufficiently related to the crime charged in the indict-

ment”).

Although couched as a traceability challenge, we agree with

the district court that Gosney’s argument constitutes an impermis-

sible attack on the grand jury’s determination of probable cause

that he committed an offense permitting forfeiture. Gosney pays

lip service to Kaley II by stating that he seeks to challenge the

“nexus” between the account and the charged crimes. But he

doesn’t argue that the account’s funds are from sources unrelated

to his alleged conduct. Rather, he cites testimony from his co-de-

fendants’ preliminary hearing to show the absence of fraud and

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22-12049 Opinion of the Court 13

argues that the scheme didn’t constitute fraud because the billings

were for medically necessary services authorized by physicians. Es-

sentially, he insists that “the revenues . . . do not constitute pro-

ceeds of a fraud” because the conduct with which he is charged

doesn’t actually constitute fraud. This argument is squarely at odds

with the factual allegations in the indictment and thus is foreclosed

by Kaley. See 571 U.S. at 341.

As a fallback, Gosney urges us to overturn Bissell and “con-

clude that, in assessing the need for a hearing, Gosney may chal-

lenge not only the nexus prong, but the guilt prong as well.” Even

if we were at liberty to overturn our binding precedent, as Gosney

suggests, it’s not Bissell that compels our conclusion. Rather, it’s

the Supreme Court’s Kaley opinion, which mandates that Gosney

has “no right to relitigate” the “grand jury’s prior determination of

probable cause to believe [he] committed the crimes charged.” 571

U.S. at 322. And, “under our system of vertical precedent, we are

bound to apply [Kaley] until it is overruled, receded from, or in

some other way altered by the Supreme Court.” United States v.

Henco Holding Corp., 985 F.3d 1290, 1302 (11th Cir. 2021).

AFFIRMED.