United States of America v. Reynoso

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA,
Petitioner,
v.
JUAN CARLOS REYNOSO,
Respondent.
Misc. No. 25-068 (FAB)
MEMORANDUM 	AND 	ORDER
BESOSA, Senior District Judge.
Before the Court is petitioner United States of America (the
“government”)’s 	request 	to 	modify 	the 	daily 	fine 	for 	non-
compliance contained in the Court’s civil contempt order at Docket
No. 	20. 	(Docket 	No. 	38.) 	For 	the 	following 	reasons, 	the
government’s request to modify the contempt order is GRANTED.
Respondent 	Juan 	Carlos 	Reynoso 	(“Reynoso”) 	was 	arrested 	on
July 	1, 	2025 	on 	fraud 	charges 	related 	to 	his 	alleged 	involvement
in a multi-million-dollar investment scheme. 	See United States v.
Reynoso, Crim. No. 25-284 (RAM), 2025 U.S. Dist. LEXIS 147462, at
*1-2 	(D.P.R. 	Jul. 	30, 	2025) 	(Arias, 	C.J.). 	In 	connection 	with
these 	charges, 	on 	January 	31, 	2025, 	the 	government 	received 	a
seizure warrant against 119.65 bitcoin (worth just over $12 million
at 	the 	time) 	held 	in 	an 	account 	under 	Reynoso’s 	control. 	See
Docket No. 20; United States v. Reynoso, 769 F. Supp. 3d 107, 110
(D.P.R. 2025) (Besosa, J.). 	The day after the warrant was issued,
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Reynoso 	did 	not 	comply, 	and 	instead 	moved 	the 	bitcoin 	out 	of 	the
account 	specified 	in 	the 	warrant 	and 	dispersed 	it 	into 	several
different accounts. 	Reynoso, 769 F. Supp. 3d at 112. 	On March 4,
2025, he was held in civil contempt for his failure to comply with
the 	warrant. 	Id. 	at 	119. 	In 	the 	contempt 	order, 	Reynoso 	was
ordered to transfer the 119.65 bitcoin to a government-controlled
wallet 	and 	would 	be 	fined 	$10,000 	for 	each 	passing 	day 	he 	failed
to 	do 	so. 	Id. 	at 	119. 	Reynoso 	filed 	an 	interlocutory 	appeal
challenging 	the 	civil 	contempt 	finding. 	See 	Docket 	No. 	30. 	He
also 	asked 	the 	Court 	to 	stay 	enforcement 	of 	the 	contempt 	order
pending the appeal. 	(Docket No. 27.) 	The Court denied his motion
to stay. 	(Docket No. 34.) 	His appeal of the contempt finding is
still pending.
On September 26, 2025, nearly seven months after the contempt
finding, the government informed the Court that Reynoso had still
not 	complied 	with 	the 	seizure 	warrant.1 	See 	Docket 	No. 	36. 	In
response to his continuing non-compliance, the government requests
that the daily fine of $10,000 from the contempt order be doubled
to $20,000. 	See Docket No. 38. 	Reynoso opposes the government’s
request, arguing that (1) his pending appeal of the contempt order
divests the Court of jurisdiction to modify the order, and (2) he
1 At the time the informative motion was filed, Reynoso had accrued $2,060,000
in fines pursuant to the contempt order. 	See Docket No. 36 at p. 3.
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Misc. No. 25-068 (FAB) 	3
is 	incapable 	of 	complying 	with 	the 	seizure 	warrant 	due 	to 	his
limited 	finances 	and 	incarceration. 	(Docket 	No. 	40 	at 	pp. 	2-3.)
The 	government 	replied 	(Docket 	No. 	43), 	and 	Reynoso 	sur-replied
(Docket No. 46).
“As 	a 	general 	rule, 	the 	filing 	of 	a 	notice 	of 	appeal 	is 	an
event of jurisdictional significance - it confers jurisdiction on
the court of appeals and divests the district court of its control
over 	those 	aspects 	of 	the 	case 	involved 	in 	the 	appeal.” 	Colón-
Torres v. Negrón-Fernández, 997 F.3d 63, 74 (1st Cir. 2021) (citing
Griggs 	v. 	Provident 	Consumer 	Disc. 	Co., 	459 	U.S. 	56, 	58 	(1982))
(internal quotation marks and alterations omitted). 	This rule is
based 	on 	judicial 	economy, 	not 	mandated 	by 	statute. 	See 	United
States 	v. 	Carpenter, 	941 	F.3d 	1, 	6 	(1st 	Cir. 	2019) 	(“[T]he
divestiture rule is rooted in concerns of judicial economy, crafted
by 	courts 	to 	avoid 	the 	confusion 	and 	inefficiency 	that 	would
inevitably result if two courts at the same time handled the same
issues in the same case.”). 	A district court retains authority to
enforce its existing orders, which includes the ability to modify
its 	orders 	to 	ensure 	compliance, 	so 	long 	as 	this 	does 	not 	affect
any issues that are pending on appeal. 	See Barnes v. Sea Hawai’i
Rafting, 	LLC, 	444 	F. 	Supp. 	3d 	1215, 	1221 	(D. 	Haw. 	2020) 	(citing
Hoffman on behalf of NLRB v. Beer Drivers & Salesmen’s Local Union,
etc., 536 F.2d 1268, 1276 (9th Cir. 1976)) (“[A]n appeal from [a]
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Misc. No. 25-068 (FAB) 	4
supervisory 	order 	does 	not 	divest 	the 	district 	court 	of
jurisdiction to continue its supervision, even though in the course
of that supervision the court acts upon or modifies the order from
which 	the 	appeal 	is 	taken”); 	Colón-Torres, 	997 	F.3d 	at 	74 	(a
district court may “enter orders that concern matters unrelated to
the substance of the decision being appealed”) (internal quotation
marks omitted).
Here, 	the 	main 	issue 	raised 	in 	Reynoso’s 	appeal 	concerns
whether he should have received an evidentiary hearing before being
held 	in 	contempt. 	See 	Brief 	for 	Appellant, 	United 	States 	v.
Reynoso, 	No. 	25-1328 	(1st 	Cir. 	Oct. 	23, 	2025), 	Docket 	No. 	40-1.
He does not challenge the penalty contained in the contempt order.
See 	id. 	Because 	the 	amount 	of 	the 	penalty 	is 	irrelevant 	to 	the
issues 	on 	appeal, 	modifying 	the 	penalty 	would 	not 	interfere 	with
the 	appeal 	process. 	Accordingly, 	the 	Court 	has 	jurisdiction 	to
modify the amount of the penalty notwithstanding Reynoso’s appeal
of the contempt order.
The 	question 	remains 	whether 	an 	increase 	in 	Reynoso’s 	daily
fine 	is 	warranted. 	“Civil 	contempt 	is 	a 	forward-looking 	penalty
meant 	to 	coerce 	compliance 	rather 	than 	to 	punish 	past
noncompliance.” 	Hawkins v. HHS, 665 F.3d 25, 32 (1st Cir. 2012).
“A 	trial 	court 	has 	wide 	discretion 	in 	its 	choice 	of 	sanctions.”
Goya 	Foods, 	Inc. 	v. 	Wallack 	Mgmt. 	Co., 	290 	F.3d 	63, 	77 	(1st 	Cir.
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Misc. No. 25-068 (FAB) 	5
2002). 	“Where the purpose of the sanction is to make the defendant
comply, the court must consider the character and magnitude of the
harm 	threatened 	by 	continued 	contumacy, 	and 	the 	probable
effectiveness 	of 	any 	suggested 	sanction 	in 	bringing 	about 	the
results.” 	Angiodynamics, 	Inc. 	v. 	Biolitec 	AG, 	946 	F. 	Supp. 	2d
205, 	214 	(D. 	Mass. 	2013) 	(citing 	United 	States 	v. 	United 	Mine
Workers of Am., 330 U.S. 258, 304 (1947)) (internal quotation marks
and alterations omitted).
To 	date, 	Reynoso 	has 	not 	complied 	with 	the 	seizure 	warrant.
It has now been almost a year since the original warrant was issued
and 	over 	ten 	months 	since 	he 	was 	held 	in 	contempt. 	The 	original
daily 	fine 	of 	$10,000 	was 	plainly 	insufficient 	to 	compel 	his
compliance. 	Accordingly, a higher daily fine is warranted.
Reynoso argues that his limited finances and limited ability
to 	perform 	financial 	transactions 	while 	incarcerated 	render
increased 	sanctions 	inappropriate. 	“Since 	civil 	contempt 	is
coercive, 	present 	inability 	to 	comply 	with 	the 	order 	in 	question
is an affirmative defense; however, the burden of production lies
with the defendant.” 	NLRB v. Flores, No. 07-2003, 2012 U.S. App.
LEXIS 	26981, 	at 	*24-25 	(1st 	Cir. 	Aug. 	6, 	2012) 	(McGiverin, 	M.J.)
(internal 	quotation 	marks 	omitted), 	report 	and 	recommendation
adopted, 	2013 	U.S. 	App. 	LEXIS 	14923 	(1st 	Cir. 	Mar. 	13, 	2013).
“This burden is not light; courts have required defendants to prove
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Misc. No. 25-068 (FAB) 	6
impossibility 	plainly 	and 	unmistakably, 	and 	categorically 	and 	in
detail.” 	Id. 	at 	25 	(internal 	quotation 	marks 	and 	citations
omitted).
Reynoso 	fails 	to 	meet 	this 	burden 	- 	he 	presents 	no 	evidence
to 	demonstrate 	his 	inability 	to 	comply 	with 	the 	warrant 	and
contempt 	order. 	Reynoso 	flatly 	asserts 	that 	he 	does 	not 	have
sufficient funds to comply with the order but does not substantiate
this claim with any evidence. 	See Docket No. 40 at p. 3. 	In any
event, 	his 	claim 	is 	undercut 	by 	the 	government’s 	proffer 	that 	he
deposited 	over 	$21.4 	million 	in 	cryptocurrency 	into 	his 	Binance
account 	between 	February 	2021 	and 	December 	2023. 	Reynoso, 	2025
U.S. Dist. LEXIS 147462, at *7. 	He also makes no effort to explain
why 	the 	119.65 	bitcoin 	he 	moved 	from 	an 	account 	he 	controlled
cannot now be transferred to the government account as mandated by
the 	seizure 	warrant. 	And, 	although 	the 	fines 	he 	has 	accrued 	to
date 	are 	significant, 	they 	are 	still 	significantly 	less 	than 	the
119.65 	bitcoin 	subject 	to 	the 	original 	warrant. 	These 	facts
suggest that he should have enough funds to pay both the original
seizure 	order 	and 	his 	accrued 	fines 	to 	date. 	Reynoso 	also 	does
not 	explain 	how 	the 	fact 	that 	he 	is 	incarcerated 	precludes 	his
ability 	to 	comply 	with 	the 	order. 	Accordingly, 	Reynoso 	has 	not
shown that he is unable to comply with the order.
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Misc. No. 25-068 (FAB) 	7
In 	conclusion, 	the 	Court 	finds 	that 	it 	has 	jurisdiction 	to
increase 	Reynoso’s 	daily 	penalty 	for 	non-compliance 	with 	its
contempt order, that such an increase is warranted by his continued
non-compliance, 	and 	that 	he 	fails 	to 	present 	any 	evidence 	of 	his
inability 	to 	comply. 	Accordingly, 	the 	government’s 	request 	to
modify 	the 	contempt 	order 	is 	GRANTED. 	Reynoso 	SHALL 	be 	fined
$20,000 	for 	every 	day 	that 	he 	violates 	the 	seizure 	warrant 	from
the 	date 	that 	this 	Memorandum 	and 	Order 	is 	published. 	Continued
failure 	to 	comply 	may 	result 	in 	additional 	fines 	and/or
incarceration.
IT IS SO ORDERED.
San Juan, Puerto Rico, January 8, 2026.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
SENIOR UNITED STATES DISTRICT JUDGE
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