COPY OF ANGELA FORD BRIEF SEEKING TO AVOID ACCOUNTING TO U.S. ATTORNEY

the following brief is a public record in the Gallion, Cunningham criminal action.

The U.S. 6th. Circuit upheld District Judge Danny Reeves order to provide an accounting.

This brief  presents her claim that she does not have to provide an accounting.

Ford was ordered to file the accounting by Nov. 5, 2011.   Upon its receipt by the Justice Department, it was
sealed by District Judge Danny Reeves.

 

Case
No. 11-6187

____________________________________________________________

UNITED
STATES COURT OF APPEALS

FOR
THE SIXTH CIRCUIT

____________________________

ANGELA M. FORD,

Appellant

v.

UNITED STATES OF
AMERICA,

Appellee

___________________________________________________________

Appeal from the
United States District Court

for the Eastern
District of Kentucky

(Honorable Danny C.
Reeves)

________________________________________________________

BRIEF
OF APPELLANT ANGELA M. FORD

________________________________________________________

 

R. Kenyon Meyer

Stephen J. Mattingly

DINSMORE & SHOHL LLP

101 S. Fifth Street, Suite 2500

Louisville, Kentucky 40202

(502) 540-2300

(502) 585-2207 – fax

kenyon.meyer@dinsmore.com

stephen.mattingly@dinsmore.com

Counsel for Angela M. Ford

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 1

 

i

 

DISCLOSURE
OF CORPORATE AFFILIATIONS

AND
FINANCIAL INTEREST

Pursuant  to FRAP 26 and 6th Cir. R. 26.1, Angela M.
Ford makes the  following

disclosure:

1.  Is said party a subsidiary or affiliate of a
publicly owned corporation?  NO

If  the
answer  is YES,  list
below  the  identity
of  the  parent
corporation  or

affiliate and the
relationship between it and the named party.

2.  Is
there a publicly owned corporation, not a party  to  the
appeal,  that has a

financial interest in
the outcome?  NO

If the answer is YES,
list the identity of such corporation and the nature of

the financial
interest:

s/ R. Kenyon
Meyer        12/1/2011

R. Kenyon Meyer

Counsel
for Appellant

Date

 

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 2

 

ii

 

TABLE
OF CONTENTS

DISCLOSURE OF
CORPORATE AFFILIATIONS

AND FINANCIAL
INTEREST
………………………………………………………………………
i

TABLE OF CONTENTS ……………………………………………………………………………… ii

TABLE OF AUTHORITIES
………………………………………………………………………..
iv

STATEMENT REGARDING
ORAL ARGUMENT ……………………………………….. v

JURISDICTIONAL
STATEMENT………………………………………………………………..
1

STATEMENT OF THE
ISSUES
……………………………………………………………………
3

STATEMENT OF THE CASE
………………………………………………………………………
4

I.  Nature of the Case, Course of Proceedings,
and Disposition Below … 4

STATEMENT OF
FACTS…………………………………………………………………………….
5

I.
Background
……………………………………………………………………………….
5

A.
The Abbot lawsuit and judgment
………………………………………… 5

B.
The  criminal  case,
Ford’s  appointment  as  victims’  legal

representative, and
the restitution order ………………………………. 6

 

II.
Recent developments leading to this appeal
………………………………….. 8

A.
The Kentucky Court of Appeals’ opinion in Abbott ………………
8

B.
The  United  States’
request  for  an
accounting  and  Ford’s

Response
………………………………………………………………………….
9

C.
Proceedings in the district court ………………………………………..
11

 

SUMMARY OF THE
ARGUMENT…………………………………………………………….
12

ARGUMENT
…………………………………………………………………………………………….
14

I.  Standard of Review.
………………………………………………………………… 14

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 3

 

iii

 

II.  The District Court Lacked  Jurisdiction
to Order  Ford  to
Provide  an

Accounting and the
Location of Her Personal Funds.. …………………. 14

A.
Ford’s attorney’s fees are included in the restitution order

and
have  been  offset
against  the  defendants’
restitution

obligation.
………………………………………………………………………
17

 

B.  The
restitution  order would  render
void  any  state
court  order

requiring  the
victims  or  Ford
to  return money  to Gallion
and

Cunningham.
…………………………………………………………………. 19

C.  The
MVRA  provision  allowing
enforcement  of  a
restitution

order  by  “available  and
reasonable  means”  does
not  permit

compelled discovery
of  assets of a  third party
that  are not  the

property of the
judgment debtor…………………………….21

D.  Ford’s
status  as  the
victims’  legal  representative  did
not

authorize the United
States to obtain discovery from her merely

by filing a motion
…………………………………………………………… 22

CONCLUSION
………………………………………………………………………………………….
25

CERTIFICATE OF
COMPLIANCE
……………………………………………………………. 26

CERTIFICATE OF
SERVICE
…………………………………………………………………….
27

APPELLANT’S
DESIGNATION OF RELEVANT DOCUMENTS ……………….. 28

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 4

 

iv

 

TABLE
OF AUTHORITIES

CASES

Baze
v. Parker,
632 F.3d 338 (6th Cir. 2011)
…………………………………. ………15, 25

Brinn
v. Tidewater Transp. Dist. Comm’n
, 242 F.3d 227 (4th Cir.
2001)………19

Burak
v. Scott
, 29 F. Supp. 775 (D.D.C. 1939) ……………………………………………….
23

Kohler
v. Transportation Cabinet
, 944 S.W.2d 146 (Ky. App. 1997)
………………. 16

Payne
v. Motorists Mut. Ins. Cos.,
4 F.3d 452 (6th
Cir. 1993) ………………………….. 14

Schultz
v. United States,
594 F.3d 1120 (9th Cir. 2010)
……………………………………
15

United
States v. Bearden
, 274 F.3d 1031 (6th Cir. 2001)……….……………18, 20

United
State v. Brown,
639 F.3d 735 (6th Cir. 2011)
………………………………………. 14

United
States v. Elson,
577 F3.d 713 (6th Cir. Ohio 2009) ……. …………………..18

United
States v. Hairston
, 888 F.2d 1349 (11th Cir. 1989)……..…………………20

United
States v. Hoglund
, 175 F3.d 410 (6th Cir. 1999)
……………………………………. 8

United
States v. Kaczynski
, 416 F.3d 971 (9th Cir. 2005)
………………………………… 20

United  States
v.  Law
,
No.  1:08-CR-137-EJL,  2011 U.S. Dist. LEXIS  79783
(D.

Idaho June 28, 2011) ………………………………………………………………………………….. 15

United
States v. One 1985 Chevrolet Corvette
, 914 F.2d 804, 807 (6th
Cir. 1990) .. 2

United  States
v.  Schwartz,

Case No.  1:09-cr-67,  2011, U.S. Dist. LEXIS  43110,

*12-13 (S.D. Ohio
2011) ……………………………………………………………………………..
22

 

United
States v. Williams
, 612 F.3d 500, 510 (6th Cir. 2010)……………………18

 

Xpedior
Inc
., 354 B.R. 210, 235 (Bankr. N.D. Ill. 2006)…………………………19

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 5

 

v

 

STATUTES
AND RULES

Fed. R. Civ. P. 26
……………………………………………………………………………………….
16

Fed. R. App. P. 32
………………………………………………………………………………………
26

Kentucky Civil Rule
76.30
…………………………………………………………………………..
16

18 U.S.C. § 3613
………………………………………………………………………………….
passim

18 U.S.C. § 3663A
……………………………………………………………………………….
passim

18 U.S.C. § 3664
………………………………………………………………………………….
passim

18 U.S.C. §§ 3771
………………………………………………………………………….
1, 4, 24, 25

28 U.S.C. § 1291
………………………………………………………………………………………
1, 2

28 U.S.C. § 3015
………………………………………………………………………………………..
15

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 6

 

vi

 

STATEMENT
REGARDING ORAL ARGUMENT

Appellant Angela M. Ford  requests oral argument  in
this matter.    It would

assist  the Court
in  understanding  the
complex  facts  and
legal  issues  involved
in

Ford’s  appeal.
Oral  argument will  further
permit  the  attorneys
for Ford  and  the

United  States
to  address  any
outstanding  factual  or
legal  issues  that
the  Court

deems relevant.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 7

 

1

 

JURISDICTIONAL
STATEMENT

The Mandatory Victims’ Restitution Act of
1996 (“MVRA”), 18 U.S.C. §§

3663A, 3664, provided
the United States District Court for the Eastern District of

Kentucky  with
jurisdiction  over  post-conviction  proceedings
against  defendants

William J. Gallion
and Shirley A. Cunningham, Jr.

On August 16, 2007, the district court, sua
sponte
, appointed Angela Ford to

serve as the victims’
legal representative under the Crime Victims’ Rights Act, 18

U.S.C. § 3771.  (R. 54, Order Appointing Ford.)  In June 2011, the district court

ordered Ford, the
lawyer for 407 victims in a Kentucky state-court lawsuit, Abbott

v.
Chesley
(“Abbott”),  to
provide “a full and complete accounting,” including the

location,  “of
all  funds  collected
by  her  in  [Abbott]  .
.  .  and
not  distributed  to

victims.”    (R. 1284, Order of Accounting.)   Ford
then moved  to alter, amend, or

vacate  the district
court’s order.    (R. 1286,
Motion  to Alter, Amend, or Vacate.)

On September 9, 2011,
the district court denied Ford’s motion to alter, amend, or

vacate.  (R. 1303, September 9, 2011 Memorandum
Opinion.)

On September 23, 2011, Ford appealed the
order requiring her to provide the

location and an
accounting of her fees and the order denying her motion to alter,

amend,  or
vacate.    (R.  1308, Notice
of Appeal.)   Under  28 U.S.C.
§  1291,  this

Court has appellate
jurisdiction over Ford’s appeal from both orders.  Because the

orders were  entered
in  a  post-conviction  proceeding,
they  are  a  “final  decision”

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 8

 

2

 

under  28
U.S.C.  §  1291
on  the  ancillary
issue  of  whether
Ford  is  required
to

provide the United
States with an accounting of funds “collected by her in [Abbott]

and  not
distributed  to  the
victims.”    See  United
States  v.  One
1985  Chevrolet

Corvette,
914 F.2d 804, 807 (6th Cir. 1990) (holding that “[a]s a practical matter,

most  post-judgment
orders  should  be
deemed  final  because
‘there  is  often  little

prospect that further
proceedings will occur to make them final’”) (internal citation

omitted).  As the Court stated in Chevrolet, “the
concept of finality for purposes of

appellate review is
to be given a practical rather than a technical construction.”  Id.

(internal  citation
and quotation omitted).   An  appeal
from  a post-judgment order

does not present a
significant risk of piecemeal review; thus, post-judgment orders

are generally  considered
final.    Id. The post-conviction orders  from which Ford

appeals are
final.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 9

 

3

 

STATEMENT
OF THE ISSUE

Did the district
court err by ordering attorney Angela M. Ford to provide the

United  States
with  an  accounting
and  the  location
of  funds  that
have  been

collected,  paid
to  the  victims,
and  offset  against
the  amount  of
the  defendants’

restitution
obligation?

 

 

 

 

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 10

 

4

 

STATEMENT
OF THE CASE

I.  Nature of the Case, Course of Proceedings,
and Disposition Below

This
appeal  arises  from
post-conviction  proceedings  against
attorneys

William  J.
Gallion  and  Shirley
A.  Cunningham,  Jr.,
who  were  convicted
of

defrauding  their
clients  out  of
settlement  proceeds.    The
appellant,  Angela M.

Ford, represents 407
of 421 of Gallion and Cunningham’s victims in a civil case in

Kentucky state court
that remains pending against Gallion, Cunningham, and other

civil
defendants.   In the  federal criminal case, Ford was appointed
by  the district

court to serve as the
victims’ legal representative under 18 U.S.C. § 3771.  (R. 54,

Order  Appointing
Ford.)    The  district
court  made  clear
that  Ford’s  role
as  the

victims’ legal
representative did not include the disbursement of funds collected in

the federal criminal
case.  (R. 958, August 19, 2009
Order.)

The  district
court  ordered  Ford
to  provide  an
accounting,  including  the

location, of all
funds collected on behalf of her clients in the state court civil case

“and not distributed
to victims.”  (R. 1284.)  Ford moved to alter, amend, or vacate

the  court’s
order.    (R.  1286.)
After  the  district
court  denied  that motion,
Ford

appealed both the
original order of accounting and the order denying her motion to

alter, amend, or
vacate the order of accounting.  (R.
1308.)

 

 

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 11

 

5

 

STATEMENT
OF FACTS

I.  Background

A.  The Abbott lawsuit and judgment

In 2004, Ford
uncovered a fraudulent scheme by Gallion, Cunningham, and

two other attorneys—Melbourne
Mills and Stanley Chesley—to steal $64 million

from over 400 of
their clients, who had been injured by the diet drug fen-phen.  (R.

913, United  States’
Sentencing Memorandum  for
Gallion,  p.  1.)
Ford  filed  the

Abbott
lawsuit and now represents 407 of the defendants’ 421 victims.  The lawsuit

named  five
defendants:  the  four
attorneys  and  the
Kentucky  Fund  for
Healthy

Living,  Inc.  (“KFHL”),  a
corporation  created  and
operated  by  the
attorneydefendants

to divert $20 million of the fen-phen
settlement funds to themselves.

In March 2006, the
Boone Circuit Court granted summary judgment in favor

of the Abbott
plaintiffs on their breach of fiduciary duty claim.  The court awarded

the  plaintiffs
$42,000,000  in  compensatory
damages    (the  “Abbott judgment”).

Holding  that
the  plaintiffs  were
the  lawful  owners
of  the  $20
million  held  by

KFHL,  the
court  also  entered
summary  judgment  against KFHL
and  imposed  a

constructive  trust
in  favor  of  the  plaintiffs
on  all  stolen  funds.
(R.  1286,  p.
3.)

After  the
civil  judgment  became
final  in  August
2007,  the  attorney-defendants

appealed but did not
supersede the judgment.  KFHL did not
appeal.  (Id.)

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 12

 

6

 

With  the
Boone  Circuit  Court’s
approval  and  oversight,
Ford  began  to

collect on the Abbott
judgment.  Ford collected and distributed
$40.2 million to her

clients, who  in
turn  compensated  Ford
in  accordance with  their
contingency  fee

agreements with
her.    (Id., pp. 3-4.)   Over half of the  funds collected came  from

KFHL, which did not
appeal.  Some amounts were also collected
from Mills, who

was acquitted in the
first criminal trial and is not subject to a restitution order.  (R.

500, Judgment of
Acquittal.)

The United
States  has  acknowledged Ford’s  critical
role  in  unearthing
the

defendants’  fraudulent
scheme  and obtaining  a
civil  judgment  against
them.    (R.

913, p. 7,.)  (“[T]he
fraud  came  to
light  through  the
civil  action  filed by
attorney

Angela Ford.”)  As noted by the government, Ford “vigorously
litigated the matter

for years”  and has done a “tremendous amount of work” on
behalf of the victims.

(Id. at
9.)

B.
The  criminal  case,
Ford’s  appointment  as
victims’  legal

representative,
and the restitution order

Ford’s  investigation
and  civil  discovery
in  Abbott led
to  federal  criminal

charges  against
Gallion,  Cunningham,  and  Mills
in  the  Eastern
District  of

Kentucky.  Chesley was granted immunity.

Early  in
the  criminal  proceedings,
the  district  court,
sua  sponte,  issued
an

order identifying
Ford as the victims’ legal representative under the Crime Victims

Rights Act and
instructing the clerk to add Ford to the service list.  (R. 54, p. 1.)

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 13

 

7

 

At  the
time  of  her
appointment,  Ford  had
neither  entered  an
appearance  in  the

district court nor
asked to be appointed the victims’ legal representative.

In April 2009, a jury
convicted Gallion and Cunningham of wire fraud and

conspiracy to commit
wire fraud.  (R. 820, Judgment of
Conviction (Gallion); R.

821, Judgments of
Conviction (Cunningham).)1  During the sentencing
process, the

United  States
argued  that  the
victims  were  entitled
to  restitution  for
the  total

amount of their loss,
including costs the victims incurred to retain Ford.  (R. 913,

pp. 11-12.)  The United States maintained that the fees
paid to Ford by the victims

were  direct
and  foreseeable  results
of  the  defendants’ wrongful  conduct
because

the victims “had no
other alternative but to retain the services of a civil attorney for

purposes of seeking
recovery of the settlement money the defendants fraudulently

took from them.”  (Id.)

The government
therefore argued that the restitution amount should include

amounts already
collected in Abbott, including any fees paid to Ford by her clients.

(Id., p.
12.)  Once the restitution amount was
fixed, the United States argued, then

the defendants would
be entitled to a credit against the total restitution figure in the

amount of any funds
collected in the civil case, including “any attorney fees paid

to  attorney
Angela  Ford.
”    (Id.)  (emphasis
added).    During  the
defendants’

sentencing
hearing,  the district court  repeatedly acknowledged  the United States’

 

1 In
the first criminal trial, a mistrial was declared as to Gallion and Cunningham,

and the jury found
Mills not guilty.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 14

 

8

 

argument  that
Ford’s  attorney’s  fees
should  be  included
in  the  total
amount  of

restitution.    (R.
1179,  Transcript  of
Sentencing  Hearing,  pp.
65-70.)    The

government  agreed
during  the  hearing
that  the  victims were
required  to  pay  an

attorney  for
the money  that  had
been  collected  for
them:  “THE  COURT:
You

would acknowledge
that they [the victims] would have to pay attorneys at least one

time? MR. WALBOURN:
Absolutely, Your Honor.”  (Id., p.
69.)

The  district
court  ultimately  ordered Gallion  and
Cunningham  to  pay
the

victims $127,679,734.05—an
amount equal to the total fen-phen settlement, minus

amounts  that
the  defendants  had
distributed  to  the
victims.    (Id.;  R.
955,  956,

Restitution
Orders.)  The court reasoned that under United
States v. Hoglund
, 178

F.3d 410, 414 (6th
Cir. 1999), the victims were entitled to the full amount of the

fen-phen settlement
because settlement funds “belong[] to the plaintiff alone,” not

his or her
attorney.  (R. 1179, pp. 58-59.)

II.  Recent developments leading to this appeal

A.  The Kentucky Court of Appeals’ opinion in Abbott

In  February
2011,  the  Kentucky
Court  of  Appeals
entered  an  opinion
in

Abbott.    The
Court  of  Appeals
determined  that  summary
judgment  was

inappropriate  because
an  affidavit  submitted
on  behalf  of
the  defendants  by

attorney Kenneth  Feinberg
created  a  question
of material  fact  on
the  breach  of

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 15

 

9

 

fiduciary  duty  claim.  (Court
of Appeals’ Opinion,  R.  1283-1.)  2    If
the  opinion

becomes final, it
will reverse the Abbott summary judgment and remand the matter

to circuit
court.  The Abbott plaintiffs
petitioned the Court of Appeals for rehearing

because Feinberg had
since recanted his affidavit.  Although
the Court of Appeals

denied  the petition
for  rehearing,  the
court  stated    that
“upon  remand,    the
trial

court may  reconsider
its opinion and order.  The court
may once  again  reject
the

affidavit  of Mr.
Feinberg . . . .”  (R. 1283-7,
Order Denying Rehearing.)

The  Abbott
plaintiffs  moved  for
discretionary  review,  and
their  motion

remains pending
before  the Kentucky Supreme Court.    (R. 1286-1-5, Motion  for

Discretionary
Review.)

B.  The United States’ request for an accounting
and Ford’s response

Several weeks
after  the Kentucky  Court
of Appeals  issued  its
opinion  in

Abbott,
the United States wrote Ford to request an accounting of all funds collected

to  satisfy
the  Abbott judgment.
(R.  1283-2,  Request
for  Accounting.)    The

government stated
that it was concerned that as a result of the Court of Appeals’

opinion,  the  Abbott plaintiffs
might  be  required
to  repay  amounts
collected  to

satisfy the Abbott
judgment.  (Id.)  Ford responded the next day, asking the
United

 

2  Feinberg opined that the fen-phen action was
settled as a class action rather than

an  aggregate
settlement.    (Id.)    The
Kentucky  Supreme  Court
has  issued  four

opinions permanently
disbarring attorneys, including the defendants, for their role

in  the
scandal.    In  each opinion,
the Supreme Court has  found—contrary  to Mr.

Feinberg’s  affidavit—that  the
action was  decertified  and
settled  as  an
aggregate

settlement. (R.
1286-1, p. 12.)

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 16

 

10

 

States  to
provide  any  authority
that would  require  the Abbott plaintiffs
to  return

money to Gallion and
Cunningham.  (R. 1283-3, 2-17-2011 Email
from Ford.)

After  an
exchange  of  emails,
Ford  emailed  the
United  States  three

distribution grids
created by a third party.  The grids
provide a detailed accounting

of all  funds collected and distributed  in
satisfaction of  the Abbott judgment.
(R.

1286-2,  Distribution
Grids.)3    For  each  Abbott plaintiff,
the  grids  provide
a

breakdown of the
gross distribution amount, the amount paid in attorney fees, the

pro-rata portion of
total expenses, the pro-rata portion of administrative expenses,

the amount of any
Medicare secondary payer claim, and the net distribution.  (Id.)

In  addition
to  these  distribution
grids,  the United  States was
provided with  the

amount of
undistributed funds.4

This  information
represented  all  information
in  Ford’s  possession

concerning the funds
collected in Abbott, other than the location of attorney’s fees

paid  to
Ford  by  her
clients.    The  United
States  does  not
dispute  that  Ford
has

accounted  for
the  $40.2 million  that
she  collected  and
distributed  to  her
clients

(including  the
amount  of  her
attorney’s  fees);  the
amount  of  funds
still  held  in

escrow for her
clients; the entire amount of fees and expenses paid to Ford by her

 

3  Ford
also  noted  in
the  email  that
the United  States  had
already  been  provided

with the grids
related to funds derived from sources other than KFHL.

4 (R.
1268, Fall 2010 Distribution Grid, R. 1295-1, 11-8-2010 Email from Ford.)

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 17

 

11

 

clients; and  the
fees paid  to a  third party
to hold and distribute  the  funds
(which

were approved by the
state court).

Nevertheless, the
United States continued  to ask Ford  for an “accounting,”

making  it
increasingly  clear  that
it  desired  information on  the
location  of Ford’s

personal  funds.
The  United  States
did  not  explicitly
state  that  it
was  seeking

information on the
location of Ford’s fees until it telephoned Ford on June 9, 2011.

(R. 1286, p. 6.)

C.  Proceedings in the district court

In June 2011, without having further
consulted with Ford, the United States

asked the district
court to order Ford to provide an accounting and the location of

“all funds collected
by her in the Abbott matter and not distributed to the victims.”

(R.  1283, Motion
for Order  of Accounting,  p.  5.)   The
district  court  granted
the

United States’ motion
before Ford’s response time had run.  (R.
1284.)  Stating that

“the  exigencies presented  [by
the United States]  support  a prompt
ruling  on  this

motion,” the district
court ordered Ford to provide an accounting and the location

of these funds within
10 days of entry of the order.  (Id.)

Ford moved to alter,
amend, or vacate the order of accounting and to stay the

district  court’s order of  accounting pending  the
resolution of  the motion  to
alter,

amend, or
vacate.  (R. 1286; R. 1287, Motion to
Stay.)  Although the district court

denied  Ford’s motion
for  a  stay,
the  court  allowed
her  to  file
the  accounting—

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 18

 

12

 

which consisted of
information on the location of fees paid by her clients—under

seal  in
camera
.    (R.  1288,
July  8,  2011 Order.)    Ford
then  filed  the
accounting

under seal. (R. 1289,
Sealed Accounting.)

After a hearing,  the district court denied Ford’s motion  to alter, amend, or

vacate.  (R. 1303.)
The court ordered the district court clerk to provide the United

States with  the
accounting  previously  filed
under  seal.    (Id.,  p.
11.)   While  the

district court  recognized
that  funds collected  from KFHL were not  subject
to  the

Kentucky  Court
of Appeals’  opinion  in  Abbott and would
not  be  subject
to  an

accounting,  the
court  nevertheless  ordered
the  clerk  to
give  the  United
States

Ford’s accounting,
which included the location of accounts holding fees collected

from KFHL.  (Id., pp. 3-4.)

SUMMARY
OF THE ARGUMENT

This Court
should  vacate  two of
the  district  court’s
orders:  (1)  the district

court’s order
requiring Ford to provide an accounting of “all funds collected by her

in  [Abbott] and not distributed  to  the
victims”; and  (2)  the court’s order denying

Ford’s motion to
alter, amend, or vacate the order of accounting.

These two orders
require Ford to provide the government with information

about  personal
funds  that  are
not  and  cannot
become  owed  to
Gallion  and

Cunningham.    The
funds  in  question
were  paid  to
Ford  by  the
victims  after  a

judgment  was
entered  in  Abbott
v.  Chesley
in
2007—nearly  two  years
before

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 19

 

13

 

Gallion and
Cunningham were convicted.  The funds
were paid from distributions

received by Ford’s
clients in 2008 and 2010.

The  district
court  lacked  jurisdiction
to  order  Ford
to  provide  information

about these
funds.  Federal courts are courts of
limited jurisdiction, and the court’s

only  possible
source  of  authority
in  post-judgment  restitution-collection

proceedings—the
Mandatory Victims Restitution Act
of  1996  (“MVRA”)—does

not permit the
accounting imposed on Ford.

The  MVRA
does  not  authorize
the  accounting  because
Ford’s  personal

funds  could
never  become  the
property  of Gallion  and Cunningham.   The
legal

fees  Ford
received  in  the
state  civil  case
were  collected  from
Gallion  and

Cunningham,  distributed
to  the  victims,
and  credited  toward
Gallion  and

Cunningham’s
restitution obligations—which included Ford’s attorney’s fees.

The restitution order
itself thus ensures that no state court could order Ford

or the victims to
return funds to Gallion and Cunningham.
The restitution order,

which encompassed the
funds previously distributed in the state court civil action,

would supersede and
nullify any state court order requiring Ford or the victims to

return  money
to  Gallion  or
Cunningham.    And  Gallion
and  Cunningham  are

estopped under  the MVRA
from  arguing  in  the  state
civil  case  that
they  did  not

defraud the
victims.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 20

 

14

 

Additionally, no
procedural mechanism permits the United States to obtain

post-judgment  discovery
from  a  third
party merely  by  filing
a motion  with  the

district court
requesting an order compelling production of the discovery.  Ford’s

court-appointed
status as the victims’ legal representative under the Crime Victims

Rights Act does not
authorize discovery of her personal funds.

This Court should therefore vacate the
district court’s orders requiring Ford

to provide the
location and an accounting of her personal funds.

ARGUMENT

I.  Standard of Review

The  district
court’s  interpretation  of
its  authority  under
the  MVRA  is  a

question of law
reviewed de novo:  “A matter requiring
statutory interpretation is a

question of law
requiring de novo review, and the starting point for interpretation

is  the
language of  the  statute
itself.” United  States  v. Brown,
639 F.3d 735,  737

(6th Cir. 2011).  Ford’s challenge to the district court’s
jurisdiction is, likewise, a

question of law
subject to de novo review.  See Payne
v. Motorists’ Mut. Ins. Cos.
,

4 F.3d 452, 454 (6th
Cir. 1993).

II.  The District Court  Lacked
Jurisdiction  to Order  Ford
to  Provide  an

Accounting
and the Location of Her Personal Funds.

The district  court
lacked  jurisdiction  to
issue  the orders on  appeal because

the  court’s
only  possible  source
of  authority  over
Ford—the MVRA—does  not

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 21

 

15

 

provide  a
statutory  basis  for
compelling  discovery  of
Ford’s  personal  funds
that

cannot become the
property of Gallion and Cunningham.

“In determining the
scope of a district court’s jurisdiction, our starting point

is that the lower
federal courts are courts of limited jurisdiction and possess only

those powers
granted  to  them by Congress.”   Baze v. Parker, 632 F.3d 338, 341

(6th Cir. 2011).  In criminal proceedings, a district court’s
authority is particularly

circumscribed,  and  “federal  courts must
be  reluctant  to
infer  that  Congress
has

expanded  their
jurisdiction.”    Id.

As the district court
recognized, its only possible source of authority to order

the  accounting
was  the  MVRA,
which  provides  the
exclusive  procedures  for

enforcing the
district court’s restitution order.  (R.
1303, p. 6); Schultz  v.  United

States,  594
F.3d  1120,  1123
(9th  Cir.  2010).

The  government’s
authority  to  conduct
discovery  under  the
MVRA  is

logically  limited
to  discovering  the
financial  condition of  the
judgment debtor
.

See
United States v. Hawkins
, 392 F. Supp. 2d 757, 760 (W.D.Va.
2005); United

States
v. Law
, No. 1:08-CR-137-EJL, 2011 U.S. Dist. LEXIS 79783, *8 (D. Idaho

June  28,
2011);  28  U.S.C.
§  3015(a)  (“the
United  States  may
have  discovery

regarding the
financial condition of the debtor in the manner in which discovery is

authorized by  the Federal Rules of Civil Procedure  in an action on a claim  for a

debt”) (emphasis
added).

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 22

 

16

 

Thus, to establish
jurisdiction for the accounting, the government must show

that  the
funds at issue are potentially
relevant  to  the debtor’s
financial condition.

See
generally
Fed. R. Civ. P. 26(b)(1).
The United States argued below
that  the

location of Ford’s
personal funds is relevant because it is possible that Ford could

become  indebted
to Gallion  and Cunningham  in  the  future
if  the Boone Circuit

Court were to order
her to repay legal fees she earned in Abbott.  The government

asserts that if this
were to occur, it would need to know the location of these funds

to  be
prepared  to  prevent
the  money  from
being  returned  to
Gallion  and

Cunningham.

In  the
proceedings  below,  Ford
argued  that  the
government’s  fears  were

unwarranted  because
it  is  unlikely
that  a  state
court  would  order
Ford  and  the

victims  to
return  money  to
Gallion  and  Cunningham,
for  numerous  reasons,

including  the
following:  (1)  the  Abbott judgment
remains  in  force
while  the

Kentucky Supreme
Court considers the plaintiffs’ motion for discretionary review.

(R.  1286,
pp.  13-14)  (citing
Kentucky  Civil  Rule
76.30  and  Kohler
v.

Transportation  Cabinet,    944
S.W.2d    146,    147
(Ky.  App.    1997));
and  (2)

equitable principles
governing the return of funds after reversal would prevent the

Boone  Circuit
Court  from  ordering
Ford  or  the
victims  to  pay
Gallion  and

Cunningham—who  have
been  criminally  convicted
for  defrauding  the
victims.

(See R. 1286,
pp. 16-18.)

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 23

 

17

 

The United States
did  not
dispute  that  the  possibility  of
such  a  state-court

order was remote; it
termed the possibility an “unlikely circumstance[].”  (R. 1312,

Transcript of
September 7, 2011 Hearing, p. 30.)

This  scenario, however,  is not merely unlikely—it  is
a  legal  impossibility.

As  detailed
below,  the  restitution
order  itself  prohibits
any  state  court
from

ordering the victims
or Ford to return to Gallion and Cunningham funds that have

been distributed  to  the
victims and offset against  the  restitution amount owed by

the defendants.

A.  Ford’s
attorney’s  fees  are
included  in  the
restitution  order  and

have
been offset against the defendants’ restitution obligation.

The
restitution  order  ensures
the  funds  collected
by  Ford  in  Abbott

including amounts
later paid to her by her clients—cannot become the property of

Gallion  and Cunningham.    (R.
1179, pp. 58-59.)   By  operation of
the  restitution

order, Gallion and
Cunningham are indebted to the victims, and their debt includes

the legal fees the
victims paid Ford to recover the money stolen from them.  As the

United States argued
during the sentencing process, Ford’s attorney’s fees were a

loss  suffered
by  the  victims
as  a  foreseeable
result  of  the
defendants’  criminal

conduct;  thus,
Ford’s  fees  were
appropriately  included  in
the  initial  restitution

amount fixed by the
district court.  (R. 913, p. 12.)

Under the MVRA, the
amounts collected and distributed in the civil case are

offset  against
the  restitution  owed
by  Gallion  and
Cunningham.    Seee.g.,
18

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 24

 

18

 

U.S.C.  §
3664(j)(2).   This Court has  recognized
that  any  amounts
received  by  a

victim  in
a  related  civil
case  are  to
be  treated  “as
potential  credits  against
the

defendant’s
restitution obligation,” because “a defendant should not have to pay a

victim for the same
loss twice.”   United States v. Elson,
577 F.3d 713, 733 (6th

Cir. Ohio 2009); United
States v. Williams
, 612 F.3d 500, 510 (6th Cir. 2010).

Where  victims
“have  received  compensation
for  their  losses,
the  district

court should offset
the restitution obligation by the amount received, assuming that

the  compensation
is  for  the
same  loss  that
is  the  subject
of  the  restitution

obligation.” Elson,  577
F.3d  at  735.
This  applies  to
payments made  to  victims

both  before
and  after  entry
of  the  restitution
order.  “[W]hen  determining
the

amount of a
restitution award under the MVRA, the court must ‘reduce restitution

by any amount the
victim received as part of a civil settlement’ . . . . to avoid[] the

undesirable result of
restitution effectuating a double recovery.” Id. at 734; United

States  v.
Bearden
,  274  F.3d
1031,  1041  (6th
Cir.  2001).   As
the United  States

argued during the
sentencing process,  the amounts  received by
the victims  in the

state civil case include
the amounts they received and paid Ford.
(R. 913, p. 12)

(asking the Court to
give the defendants credit for any amounts paid to the victims

in the civil case, including
“attorney fees paid to attorney Angela Ford”).

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 25

 

19

 

In sum, the funds of
which the government seeks an accounting were part of

the  restitution order, and  their distribution  to  the
victims  reduced  the defendants’

obligations under the
restitution order.

B.  The
restitution  order  would
render  void  any
state  court  order

requiring  the
victims  or  Ford
to  return  money
to  Gallion  and

Cunningham.

The Supremacy Clause
ensures  that as  long  as  the defendants’  convictions

stand,  no
state  court  could
order  Ford  or
the  victims  to
return  to  Gallion
and

Cunningham  funds
that  have  been
determined  to  be
part  of  the  defendants’

restitution  obligation.
Any  such  state
court  order  would
conflict  with  the

restitution order
itself.

Federal court orders
enforcing federal statutes and federal rights have been

held to supersede
conflicting state acts.  “Federal court
orders enforcing a federal

statute  (such
as  the Bankruptcy Code)  supersede
any  contrary  state
law.”    In  re

Xpedior  Inc.,  354
B.R.  210,  235
(Bankr. N.D.  Ill.  2006).
“A  state  statute
that

thwarts a federal
court order enforcing federal rights ‘cannot survive the command

of  the Supremacy Clause.’”   Brinn v. Tidewater Transp. Dist. Comm’n,
242 F.3d

227, 233-34 (4th Cir.
2001).

Federal courts
recognize the dominance of federal court restitution orders in

several  contexts.
For  example,  this
Court  has  held
that  settlement  agreements

between criminal
wrongdoers and their victims in resolution of civil cases cannot

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 26

 

20

 

preclude entry of
restitution orders by district courts for the same wrong.  Bearden,

274 F.3d at
1040-41.   The Eleventh Circuit has found
that the dismissal of a civil

action  in
state  court  does
not  preclude  a
restitution  order  on
the  same  claim.

United
States v. Hairston
, 888 F.2d 1349, 1355 (11th Cir. 1989).

A restitution order
is an order enforcing a federal statute, the MVRA.  The

restitution  order
here  would  thus
render  null  and
void  any  state
court  order

requiring money  already
distributed  to  the
victims  to  be
returned  to Gallion  and

Cunningham.    Such
an  order  would
conflict  with  the
restitution  order,  which

determined  that
Gallion  and  Cunningham
are  indebted  to
the  victims  for
the

amounts stolen and
for attorney’s fees paid by the victims to Ford.  As the United

States argued during
sentencing, Ford’s attorney’s fees—which are the subject of

the  accounting—are money
that  has  been
distributed  to  the
victims,  as

contemplated by the
restitution order.

The supremacy of the
restitution order is supported by a related provision of

the MVRA,  18
U.S.C.  §  3664(l),
which  estops  Gallion
and  Cunningham  from

arguing  to
the  state  court
that  they  did
not  defraud  the
victims.   Under  section

3664(l),

[a] conviction of a
defendant for an offense involving the

act  giving
rise  to  an
order  of  restitution
shall  estop  the

defendant  from
denying  the  essential
allegations  of  that

offense  in
any  subsequent  Federal
civil  proceeding  or

State civil
proceeding, to the extent consistent with State

law, brought by the
victim.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 27

 

21

 

18 U.S.C.  §
3664(l).   Because Gallion  and Cunningham were  convicted
of wire

fraud and conspiracy
to commit wire fraud, they are estopped from arguing to the

state  court
in  Abbott that
they  did  not
commit  fraud  or
steal  from  the
victims.

Section 3664(l)  is
complementary  to  the
restitution order  and  reinforces
that  any

state  court
order  requiring  the
victims  (or  Ford)
to  return  money
Gallion  and

Cunningham would be
void under the Supremacy Clause.

It would therefore be legally impossible for
Ford’s personal funds to become

the property of the
judgment debtors, Gallion and Cunningham.
Accordingly, the

district  court
lacked  jurisdiction  to
order  Ford  to
produce  an  accounting
of  her

personal funds.

C.  The MVRA provision allowing enforcement of a
restitution order

by “available
and  reasonable means” does not
permit  compelled

discovery
of assets of a third party that are not the property of the

judgment
debtor.

The  district
court  justified  the
accounting  by  holding
that  it  was  an

“available and  reasonable means” of enforcing  the
restitution order and was  thus

appropriate  under
18  U.S.C.  §
3664(m)(1)(A)(ii),  which  states
that  the  United

States  may
enforce  a  restitution
order  “by  all
other  available  and
reasonable

means.”  (R. 1303, pp. 6-7.)

The government’s
request for an accounting is not “reasonable” because, for

the reasons detailed
above, the funds in question could never become the property

of the judgment
debtors, Gallion and Cunningham.  While
this provision gives the

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 28

 

22

 

United States, “some
degree of discretion” as to how to enforce a restitution lien,

see
United States  v. Kaczynski
,
416 F.3d 971, 976  (9th Cir.  2005), no
published

federal decision
holds  that  this provision could authorize discovery of
assets  that

are not and could
never become the property of a judgment debtor.

The request for an
accounting is also not an “available” means of enforcing a

restitution
order.   No court has held  that
this provision allows the government to

subject a non-party
to discovery merely by filing a motion.
Courts have, instead,

cited  the  “available  and
reasonable  means”  language
to  support  the
use  of

“available” statutory
procedures for collecting on a debt.  See,
e.g., United States v.

Schwartz,
Case No. 1:09-cr-67, 2011 U.S. Dist. LEXIS 43110, *12-13 (S.D. Ohio

2011) (“The FDCPA
[Federal Debt Collection Procedures Act] is an ‘available and

reasonable   means’

of  enforcing  the  judgment”)  (internal
citation  omitted).   As

detailed  below,
the  government  did
not  use  any  “available”
method  of  seeking

discovery from a
third party.

D.  Ford’s status as the victims’ legal
representative did not authorize

the
United States to obtain discovery from her merely by filing a

motion.

The United States has
not  identified or utilized any  federal or
state  rule of

procedure  that
would  require  a
non-party  to  produce,
in  response  to  the

government’s motion,
information about personal finances that do not belong to a

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 29

 

23

 

judgment debtor.  In fact, the procedural rules do not permit
discovery from a nonparty

under these circumstances, for several
reasons.

First,  the
Federal  Rules  of
Civil  Procedure  generally
do  not  permit
a

judgment  creditor
to  discover  the
personal  assets  of
a  non-party.    See
Burak  v.

Scott, 29
F. Supp. 775, 776  (D.D.C. 1939).    In Burak,  the district court held  that

Federal Rule of Civil
Procedure 69, which provides for post-judgment discovery,

does not give a
judgment creditor “any right . . . to require the disclosure of assets

of  persons
other  than  the
judgment  debtor.”    Id.
Quashing  subpoenas  issued
to

non-parties by the
judgment debtor, the court held that the non-parties “cannot be

required, by  the Rules of Civil Procedure referred  to,  to
make disclosure of their

individual assets.”  Id.

Second,  the
United  States  did
not  employ  any
civil-judgment  collection

mechanism  for
bringing  a  non-party
before  the  court
to  obtain  discovery.
The

government did
not,  for example,  issue a
subpoena to Ford.   Cf. Law,
2011 U.S.

Dist. LEXIS 79783 at
*1-5  (in an attempt  to discover assets  the
judgment debtor

had deposited in her
mother’s bank account, the United States issued subpoenas to

the mother’s bank and
conducted a debtor examination of the mother).
Instead, it

simply  filed
a motion  seeking  to
compel  Ford  to
produce  her  personal
financial

information.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 30

 

24

 

The government and
district court justified the motion for an accounting by

invoking Ford’s  status as the victims’  representative.   The government  suggested

that  the district court had  jurisdiction over Ford because  she was
an  “arm of  the

Court” and because
she “holds funds for the benefit of the victims of the crimes of

the defendants in
this case.”  (R. 1297, United States’
Pre-Hearing Memorandum,

p. 4.)  The court reasoned that it had jurisdiction
to order the accounting because

Ford,  as
the  court-appointed  victims’
representative, was  “related  to
the  action”

and “an active
participant in the case.”  (R. 1303, p.
6.)

Neither the
government nor the district court explained how Ford’s limited

role  as
the  victims’  legal
representative  under  the
Crime  Victims  Rights
Act

(“CVRA”) conferred on
the court unfettered authority  to  require Ford
to disclose

her personal
assets.  Ford’s role as the victims’
representative is to ensure that the

victims are afforded
the following eight rights enumerated in 18 U.S.C. § 3771:

(1)  The
right  to  be  reasonably  protected
from  the

accused.

(2)  The
right    to    reasonable,    accurate,
and    timely

notice   of
any   public    court proceeding, or  any parole

proceeding,  involving
the  crime  or  of  any
release  or

escape of the accused.

(3)  The
right  not  to
be  excluded  from
any  such  public

court proceeding,
unless the  court,  after
receiving  clear

and  convincing
evidence,  determines  that testimony by

the victim would be
materially altered if the victim heard

other testimony at
that proceeding.

(4)  The
right    to  be
reasonably  heard  at
any  public

proceeding  in  the
district court involving release, plea,

sentencing, or any
parole proceeding.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 31

 

25

 

(5) The  reasonable
right  to  confer with
the  attorney  for

the Government in the
case.

(6) The right to full
and timely restitution as provided in

law.

(7)  The
right  to  proceedings
free  from  unreasonable

delay.

(8) The    right
to   be    treated
with    fairness   and
with

respect  for
the  victim’s dignity and
privacy.

18  USCS
§  3771(a).    Ford’s
appointment  by  the
district  court  to
represent  the

victims in this
capacity placed her in a position akin to counsel of record.

But  neither
the  government  nor
the  district  court
identified  any  rule
that

requires  attorneys
to  provide  extensive
discovery  of  their
personal  assets merely

because they are
practicing before a federal court.
Federal district courts “possess

only those powers
granted to them by Congress,” Baze, 632 F.3d at 341, and have

no  generalized
authority  to  require
an  attorney  to
produce  personal  financial

information to a
party-litigant.

CONCLUSION

For the above reasons, Angela M. Ford
respectfully requests that the Court

vacate the district
court’s June 29, 2011 and September 9, 2011 orders.

 

 

 

 

 

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 32

 

26

 

Respectfully
submitted

 

/s R. Kenyon Meyer__________

R. Kenyon Meyer

Stephen J. Mattingly

DINSMORE & SHOHL LLP

101 S. Fifth Street, Suite 2500

Louisville, Kentucky 40202

(502) 540-2300

(502) 585-2207 – fax

kenyon.meyer@dinsmore.com

Counsel for Angela M. Ford

CERTIFICATE
OF COMPLIANCE

I  hereby
certify  that  the
foregoing  brief  complies
with  the  type-volume

limitation provided
in Fed. R. App. P. 32(a)(7)(B).
The  foregoing brief contains

5,529  words
of  Times  New
Roman  (14  point)
proportional  type.    The
word

processing software
used to prepare this brief was Microsoft Word 2007.

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 33

 

27

 

CERTIFICATE
OF SERVICE

On December 1, 2011,
I electronically filed this document with the clerk of

the  court
by  using  the CM/ECF
system which will  send  notice
of  the  electronic

filing to all parties
of record.

 

/s R. Kenyon Meyer_____________

Counsel for Angela M. Ford

 

 

 

 

Case: 11-6187 Document:
006111143825 Filed: 12/01/2011 Page: 34

 

28

 

APPELLANT’S
DESIGNATION OF RELEVANT DOCUMENTS

 

Appellant,  pursuant
to  Sixth  Circuit
Rule  28(c),  hereby
designates  the

following filings in
the district court’s record as relevant documents:

Description
of Item

Record
Entry

Number

District Court Docket
Sheet  –

Order Appointing
Ford  54

Judgment of
Acquittal  500

Judgment of
Conviction (Gallion)  820

Judgment of
Conviction (Cunningham)  821

Sentencing Memorandum
for Gallion  913

Restitution Order
(Gallion)  955

Restitution Order
(Cunningham)  956

August 19, 2009
Order  958

Transcript of
Sentencing Hearing  1179

Fall 2010
Distribution Grid  1268-9

Motion for Order of
Accounting  1283

Kentucky Court of
Appeals’ Opinion  1283-1

Request for
Accounting  1283-2

2-17-2011 Email from
Ford   1283-3

Order Denying
Rehearing  1283-7

Order of
Accounting  1284

Motion to Alter,
Amend, or Vacate  1286

Motion for
Discretionary Review  1286-1 – 1286-5

Distribution
Grids  1286-2

Motion to Stay  1287

July 8, 2011
Order  1288

Sealed
Accounting   1289

11-8-2010 Email from
Ford  1295-1

United States’
Pre-Hearing Memorandum  1297

September 9, 2011
Memorandum Opinion  1303

Notice of Appeal  1308

Transcript of
September 7, 2011 Hearing  1312

886548v3

 

Comments are closed.