USA v. Stewart et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Criminal Case No. 21-cr-034-WJM
UNITED STATES OF AMERICA,
Plaintiff,
v.
1. 	MICHAEL SHAWN STEWART, and
2. 	BRYANT EDWIN SEWALL,
Defendants.
ORDER DENYING CONSTRUED MOTION FOR DISCOVERY COSTS
On February 14, 2025, the Court held a conference to set a schedule for limited
discovery and dispositive briefing on Hase Haus, LLC, Casa Conejo, LLC, Michael
Charles Baker, Salve Regina Trust, West Beach LLC, Michael Young, Maria Young,
Susanna Young, Joseph Young, Luisa Young, Michael Young II, and Moncia Young’s
(collectively, “Petitioners”) Verified Second Amended Ancillary Petition filed pursuant to
Fed. R. Crim. P. 32.2 and 21 U.S.C. § 853(n) (ECF No. 502) (“Second Amended
Petition”). The parties submitted a proposed scheduling order in advance of the
conference, in which Petitioners stated:
The Petitioners seek an Order that all costs of discovery,
including Petitioners’ discovery, be borne by the government
because all of Petitioners’ assets are frozen, at present Mr.
Young is incarcerated and without an income, and Mrs.
Young is responsible for six minor children and does not
have any income.
(See ECF No. 499 at 12.) The Court directed Petitioners to brief any argument and
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authority supporting their request that the United States of America (the “United States”
or the “Government”) bear their discovery costs associated with litigating the Second
Amended Petition. (See id.)
Now before the Court is Petitioners’ Brief Regarding Discovery Costs, which the
Court construes as a motion requesting that the Court prospectively shift Petitioners’
discovery costs to the Government and award them $35,000 (ECF No. 503) (the
“Motion”). The Government opposes the Motion. (ECF No. 507.)
For the reasons explained below, the Motion is denied.
I. ANALYSIS
Petitioners cite three authorities that purportedly authorize the Court to award
them their anticipated discovery costs: (1) the Sixth Amendment; (2) 18 U.S.C. § 983(b),
as added to the United States Code by the Civil Asset and Forfeiture Reform Act of
2000 (“CAFRA”); and (3) the Due Process Clause. (See generally ECF No. 503.) As
discussed below, however, these authorities do not permit this Court to prospectively
shift Petitioners’ discovery costs to the Government.
A. 	Sixth Amendment
Petitioners’ contention that the Sixth Amendment “[m]ay [r]equire [c]ost [s]hifting”
requires two analytical leaps. (ECF No. 503 at 5.) First, Petitioners assert that,
although they “are not facing imprisonment in these forfeiture proceedings” (id.), the
Sixth Amendment’s guarantee to counsel may extend to them based on the Supreme
Court’s acknowledgement that “even those protections associated with criminal cases
may apply to a civil forfeiture proceeding if it is so punitive that the proceeding must
reasonably be considered criminal.” Austin v. United States, 509 U.S. 602, 608 n.4
(1993). In turn, Petitioners reason that, if they have a constitutional right to counsel in
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connection with these forfeiture proceedings, they are also entitled to their costs of
discovery because “appointed counsel typically procure reasonable funds to pay
litigation costs from the government as part of their appointment.” (ECF No. 503 at 5.)
Petitioners’ argument fails at the first step. Despite the Supreme Court’s dicta in
Austin, it “has so far been unwilling to deem forfeiture proceedings ‘criminal’ for the
purpose of counsel.” U.S. v. Deninno, 103 F.3d 82, 86 (10th Cir. 1996). Thus,
Petitioners’ entitlement to discovery costs cannot flow from any asserted constitutional
right to counsel in connection with these forfeiture proceedings.
B. 	18 U.S.C. § 983(b)
On the other hand, Congress has “creat[ed] a statutory right to counsel in certain
types of civil forfeiture proceedings” through the Civil Asset Forfeiture Reform Act of
2000 (“CAFRA”), codified in part at 18 U.S.C. § 983. United States v. 777 Greene
Avenue, 609 F.3d 94, 97–98 (2d Cir. 2010) (citation omitted). In pertinent part, § 983(b)
states:
(2)(A) If a person with standing to contest the forfeiture of
property in a judicial civil forfeiture proceeding under a civil
forfeiture statute is financially unable to obtain representation
by counsel, and the property subject to forfeiture is real
property that is being used by the person as a primary
residence, the court, at the request of the person, shall
insure that the person is represented by an attorney for the
Legal Services Corporation with respect to the claim.
(B)(i) At appropriate times during a representation under
subparagraph (A), the Legal Services Corporation shall
submit a statement of reasonable attorney fees and costs to
the court.
(ii) The court shall enter judgment in favor of the Legal
Services Corporation for reasonable attorney fees and costs
submitted pursuant to clause (i) and treat such judgment as
payable under section 2465 of title 28, United States Code,
regardless of the outcome of the case.
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(3) The Court shall set the compensation for representation
under this subsection, which shall be equivalent to that
provided for court-appointed representation under section
3006A of this title.
18 U.S.C. § 983(b)(2)–(3). While acknowledging “[t]he issue as to whether the current
forfeiture proceedings are criminal or civil does not contain a clear answer under the
law,” Petitioners “submit that [§ 983(b)] authorizes this Court to approve a reasonable
amount of costs to be payable by the government in their defense of these forfeiture
proceedings.” (ECF No. 503 at 1–3.)
To be sure, there is support for the view that a proceeding conducted pursuant to
21 U.S.C. § 853(n) is at least civil in nature, even if conducted ancillary to a criminal
case. See U.S. v. Moser, 586 F.3d 1089, 1092–95 (8th Cir. 2009). Nonetheless, the
majority of courts to have considered the issue have concluded that an ancillary criminal
forfeiture proceeding is not a “judicial civil forfeiture proceeding under a civil forfeiture
statute,” as that phrase is used in § 983(b). See United States v. Croft, 2023 WL
3676959, at *5 (W.D. Tex. May 26, 2023) (third party claiming an interest in property
subject to forfeiture was not entitled to appointment of counsel because “[s]ection
983(b)(2)(a) governs civil forfeiture proceedings, and the underlying forfeiture was a
criminal forfeiture proceeding”); U.S. v. $19,985.99 in U.S. Currency, 2013 WL
1969884, at *2 (C.D. Cal. May 13, 2013) (although district court had consolidated civil
forfeiture action with ancillary criminal forfeiture proceedings, it acknowledged that
“§ 983(b)(2) authorize[d] appointments in civil forfeiture actions only”); U.S. v.
D’Esclavelles, 541 F. Supp. 2d 794, 797 (E.D. Va. 2008) (concluding “civil proceeding to
forfeit property” was not synonymous with a “civil forfeiture proceeding under a civil
forfeiture statute,” as used in CAFRA), rev’d on other grounds 2009 WL 550664 (4th Cir.
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Mar. 5, 2009).1
Even assuming, however, that § 983(b) does apply to forfeiture proceedings
ancillary to a criminal case, Petitioners have not shown that the statute authorizes the
Court to award them a lump sum for their anticipated discovery costs. Cf., e.g., U.S. v.
$23,400.00 in U.S. Currency, 2007 WL 1080292, at *1–4 (W.D.N.C. Apr. 9, 2007)
(considering claimant’s motion for reasonable fees and costs pursuant to CAFRA at the
conclusion of trial court proceedings, as supported by “documents detailing . . . the
actual costs associated with pursuing this litigation”).
For at least these reasons, the Court finds there is no “clear statement of waiver[]
of sovereign immunity” permitting it to prospectively award Petitioners their estimated
discovery costs associated with litigating the Second Amended Petition against the
Government under § 983(b). United States v. Williams, 514 U.S. 527, 541 (1995); see
also Fed. R. Civ. P. 54(d)(1) (“costs against the United States . . . may be imposed only
to the extent allowed by law”).
C. 	Due Process Clause
Petitioners lastly assert that due process “require[s] the government to assume
the costs of reasonable discovery and expert witness fees so that Mr. and Mrs. Young
have access to a fair hearing where both sides are allowed to take discovery and
introduce expert testimony.” (ECF No. 503 at 4.) The Court again disagrees.
Petitioners argue “this case is unique” because “Mr. and Mrs. Young are indigent
1 But see U.S. v. Counterfeit Merchandise & Proceeds from Sales of Counterfeit
Merchandise, 2011 WL 1667437, at *3 (N.D. Cal. May 3, 2011) (where “[t]he Government
concede[d] that the Court has discretion to appoint counsel for a financially eligible person in a
forfeiture action in connection with a related criminal case”).
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because the government . . . has frozen every dime of their assets” in a related
proceeding involving the Securities and Exchange Commission. (Id.); see generally
United States Securities & Exchange Commission v. Mediatrix Capital Inc. et al., Case
No. 1:19-cv-02594-RM-JPO (D. Colo.) (“SEC Action”). Moreover, Petitioners argue that
Mr. Young was released from custody only recently, on February 21, 2025, and “has no
reasonable expectation that he can continue to meet the basic needs of his family and
pay for expert fees and discovery costs in these proceedings given his recent release.”
(ECF No. 503 at 4.) In support, Petitioners cite only Mathews v. Eldridge, in which the
Supreme Court stated that “[d]ue process is flexible and calls for such procedural
protections as the particular situation demands.” 424 U.S. 319, 334 (1976).
The Government correctly points out, however, that even litigants proceeding in
forma pauperis are “not entitled to cost-free discovery.” Gibson v. Campbell, 2010 WL
5158369, at *2 (D. Colo. Dec. 14, 2010); see also Hawkinson v. Montoya, 2006 WL
1215397, at *2 (D. Colo. May 4, 2006) (same); Ankeney v. Creany, 2011 WL 7094380,
at *4 (D. Colo. June 30, 2011) (“The court will not direct the defendants to bear the
costs of the plaintiff’s discovery.”). Moreover, as of his sentencing less than one year
ago, Mr. Young appears to have received an employment offer pending his release from
custody, which he expects will carry a pay increase. USA v. Young, Case No. 1:20-cr-
00349-RBJ (D.Colo.) (ECF No. 41 at ¶ 60).
Accordingly, the Court remains unconvinced that due process principles compel
it to shift Petitioners’ anticipated discovery costs to the Government.
II. CONCLUSION
For the reasons set forth above, Petitioners’ construed motion for an advance
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award of their prospective discovery costs (ECF No. 503) is DENIED without prejudice
to the following: In the event Petitioners prevail, at least in part, on their Second
Amended Petition, they may file a motion at the conclusion of litigation to recover any
costs they actually incurred that are awardable under any applicable authority.
Dated this 18th day of March, 2025.
BY THE COURT:
______________________
William J. Martínez
Senior United States District Judge
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