1:25-cv-01576•United States of America v. Cline et al
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- 1 - UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK UNITED STATES OF AMERICA, Plaintiff, 1:25-CV-1576 v. (GTS/DJS) DOUGLAS CLINE and JOANNE CLINE, Defendants. APPEARANCES: OF COUNSEL: UNITED STATES ATTORNEY’S OFFICE CHRISTOPHER R. MORAN, ESQ. 445 Broadway, Room 218 Albany, NY 12207 DOUGLAS CLINE Defendant pro se Saratoga Springs, NY 12866 JOANNE CLINE Defendant pro se Bolton Landing, NY 12814 DANIEL J. STEWART United States Magistrate Judge REPORT- RECOMMENDATION AND ORDER I. INTRODUCTION On March 29, 2024, the United States commenced an action, Cline #1, under the Controlled Substances Act (“CSA”), codified at 21 U.S.C. §§ 801-971, seeking civil penalties against Dr. Douglas Cline (“Dr. Cline”) doing business as Chronic Pain Management (“CPM”), as well as his Nurse Practitioner Laurie Mckenna (“NP Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 1 of 22
- 2 - Mckenna”). See United States v. Cline, 1:24-CV-451 (N.D.N.Y.) (Cline #1). During discovery in the initial action, Dr. Cline indicated that he had no substantial ability to pay a fine. Cline #1 at Dkt. No. 53 (“Chronic Pain Management is now defunct as all of its assets have been sold and . . . Dr. Cline lacks the ability to pay a monetary penalty.”). In light of that position, this Court then held that Dr. Cline’s financial information was the proper subject of discovery. Id. at Dkt. Nos. 55 & 85. The Government asserts that Dr. Cline was not forthcoming regarding his actual assets, which is an important issue in the case as any substantial fine imposed by the Court under the CSA would have to take into consideration the Defendant’s financial status and his ability to pay. See, e.g., Advance Pharm., Inc. v. United States, 391 F.3d 377, 399 (2d Cir. 2004) (“[I]n determining monetary penalties under § 842(c), district courts have frequently considered four factors: (1) the level of defendant’s culpability, (2) the public harm caused by the violations, (3) defendant’s profits from the violations, and (4) defendant’s ability to pay a penalty.”) (citations omitted). The Government argues that discovery has established Plaintiff’s ownership in a home believed to be worth approximately $1,750,000 that is located in Bolton Landing, New York, on the shores of Lake George (the “Bolton Property”), which he then purportedly transferred to Joanne Cline (“Ms. Cline”) as part of a divorce settlement, but under circumstances that indicated that Dr. Cline had effectively maintained an ownership interest in the property. Dkt. No. 1, Compl. at ¶¶ 20-21, 23-25, & 29-51; Dkt. No. 4 at pp. 24-28. In light of that position, the Government commenced the present action against Dr. Cline and Ms. Cline, Cline #2, alleging that the transfer of the Bolton Property was a fraudulent conveyance in violation Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 2 of 22
- 3 - of the Federal Debt Collection Procedure Act (“FDCPA”). See United States v. Cline, 1:25-CV-1576 (N.D.N.Y.) (Cline #2); see also Compl. Presently before the Court in this matter are the Defendants’ separate Motions to Dismiss the Complaint pursuant to Rules 9 and 12(b) of the Federal Rules of Civil Procedure, Dkt. Nos. 16-17 & 32-33, as well as the Government’s Application for prejudgment remedies pursuant to 28 U.S.C. § 3001(a)(2). Dkt. Nos. 3-4. The Motions to Dismiss have been referred to the undersigned for issuance of a report- recommendation. Dkt. No. 38. Regarding prejudgment remedies, the Government initially sought a writ of sequestration, as well as a writ of attachment of a ½ interest ($875,000.00) in the Bolton Property by way of an ex parte procedure, but the Court, in its discretion, converted the matter to a hearing on notice to the Defendants. Dkt. Nos. 3-4, 6, & 8. That Hearing was held on December 9, 2025, at which time the Court heard from the Government as well as the pro se Defendants. See Text Minute Entry for December 18, 2025; Dkt. No. 36, Tr. In connection with the pending Motions, the Court has considered: the Complaint (Dkt. No. 1); the Government’s Application for Prejudgment Writs of Attachment and Sequestration, including the forty-one attached exhibits (Dkt. Nos. 3-4); the Court’s Orders regarding service of process (Dkt. Nos. 6 & 8-9); the Government’s Letters regarding the status of service of process (Dkt. Nos. 7 & 12); the Government’s supplemental Letter Brief regarding prejudgment remedies (Dkt. No. 13); Dr. Cline’s Motion to Dismiss (Dkt. Nos. 16 & 33); Ms. Cline’s Motion to Dismiss (Dkt. Nos. 17 & 32); Dr. Cline and Ms. Cline’s Responses to the Government’s Letter Brief (Dkt. Nos. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 3 of 22
- 4 - 18-19); the Government’s Opposition to Dr. Cline and Ms. Cline’s Motions to Dismiss (Dkt. No. 23 & 34); as well as the arguments presented during the Hearing (Dkt. No. 36). For the reasons set forth herein, the Government’s Motion for a prejudgment writ of attachment in the amount of $875,000.00 against the Bolton Property is hereby granted, and it is recommended that the Defendants’ Motions to Dismiss the Complaint be denied. II. MOTION TO DISMISS On a motion to dismiss, the allegations of a complaint must be accepted as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972). The trial court’s function “is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984)). The Court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. See Retail Clerks Int’l Ass’n, Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 754 (1963). Nevertheless, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted). A motion to dismiss pursuant to Rule 12(b)(6) may not be granted so long as the complaint includes “enough Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 4 of 22
- 5 - facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. at 697. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. at 678. This plausibility standard “is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. In this respect, to survive dismissal, a plaintiff “must provide the grounds upon which his claim rests through factual allegations sufficient ‘to raise a right to relief above the speculative level.’” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 440 U.S. at 555). Thus, in spite of the deference the court is bound to give to a plaintiff’s allegations, it is not proper for the court to assume that “the [plaintiff] can prove facts [which he or she] has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged.” Assoc. Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). The process of determining whether a plaintiff has “nudged [his or her] claims . . . across the line from conceivable to plausible,” entails a “context- specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. at 679-80. The Government asserts two causes of action in this matter. The first cause of action alleges a fraudulent transfer of the Bolton Property under the FDCPA. Compl. at ¶¶ 61-64 (citing 28 U.S.C. § 3304). The second cause of action alleges avoidance of transfer under New York Debtor and Creditor Law (“NY DCL”). Id. at ¶¶ 65-67 (citing Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 5 of 22
- 6 - NY DCL § 276). The Government asserts that Dr. Cline’s transfer of the Bolton Property to Ms. Cline “was made with actual intent to hinder, delay, or defraud the United States.” Id. at ¶¶ 62 & 66. The Government further alleges that “[t]he transfer was also made without Dr. Cline receiving reasonably equivalent value at a time when he believed or reasonably should have believed that he would incur debts beyond his ability to pay as they became due.” Id. at ¶ 63. The United States seeks to void the transfer so that any lien “may attach to the [Bolton] Property and satisfy any judgment that Dr. Cline owes the United States in the CSA Case.” Id. at ¶¶ 64 & 67. Additionally, the Government requests that the Court enter a declaratory judgment that the transfer of the Bolton Property was fraudulent as to the United States and is voidable to the extent necessary to satisfy any money judgment in Cline #1. See id. at p. 9. The claim under the FDCPA is governed by 28 U.S.C. § 3304. The statute provides, in pertinent part, that: [A] transfer made or obligation incurred by a debtor is fraudulent as to a debt to the United States, whether such debt arises before or after the transfer is made or the obligation is incurred, if the debtor makes the transfer or incurs the obligation – (A) with actual intent to hinder, delay, or defraud a creditor. 28 U.S.C. § 3304(b)(1)(A). This provision also provides for relief in connection with constructive fraud relative to a future obligation to the United States, if “(B) without receiving a reasonably equivalent value in exchange for the transfer or obligation if the debtor – . . . (ii) intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.” Id. at (b)(1)(B). Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 6 of 22
- 7 - As an aid to determining the actual intent of the debtor, the statute points to eleven factors or badges of fraud. Id. at (b)(2). The factors for the court to consider, among others, are whether: (A) the transfer or obligation was to an insider; (B) the debtor retained possession or control of the property transferred after the transfer; (C) the transfer or obligation was disclosed or concealed; (D) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (E) the transfer was of substantially all the debtor’s assets; (F) the debtor absconded; (G) the debtor removed or concealed assets; (H) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (I) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (J) the transfer occurred shortly before or shortly after a substantial debt was incurred; and (K) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. Id. The Complaint in this case, though vigorously contested by Defendants, is detailed and fact specific. The Complaint alleges that, in 2011, Dr. Cline founded CPM, a medical practice which, at its height in 2024, grew to 500 patients. Compl. at ¶ 9. As part of its licensed services, CPM provided opioid prescriptions to its patients. Id. During this time, the federal authorities began a multi-year investigation into Dr. Cline and CPM which centered on their opioid prescription practices. Id. at ¶¶ 10-11. As part of that investigation, in February 2021, the Government served an administrative subpoena on CPM requesting records with regard to specific patients, including Patients 1, 2, and 3, Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 7 of 22
- 8 - who are identified by number in the CSA Complaint. Id. at ¶ 12. Dr. Cline acknowledged potential problems with at least Patients 1 and 2. Id. at ¶ 13. Approximately a year later, on February 17, 2022, the Government sent a letter to then-legal counsel for Dr. Cline, William Dreyer, outlining why Dr. Cline, CPM, and others faced the potential for substantial civil liability for prescriptions written for Patients 1, 2, and 3. Id. at ¶ 14. The Complaint also alleges that Dr. Cline, himself, purchased the Bolton Property in 2005, and that it was worth approximately $1.7 million. Id. at ¶¶ 15 & 25. Dr. Cline held the Bolton Property in his own name through 2022. Id. at ¶ 17. During this time, Dr. Cline was married to Ms. Cline, and they resided together at the Bolton Property. Id. at ¶ 19. The Government alleges in the Complaint that, in 2022, Dr. Cline fraudulently transferred the Bolton Property to Ms. Cline. Id. at ¶¶ 19-60. In particular, on June 23, 2022, Dr. Cline and Ms. Cline signed a separation agreement. Id. at ¶ 20. Dr. Cline was not represented by counsel for purposes of the separation agreement, but his wife was. Id. at ¶¶ 26-27. Under the agreement, Ms. Cline received the Bolton Property, and Dr. Cline retained ownership of his medical practice, CPM. Id. at ¶ 21. On August 1, 2022, Dr. Cline transferred substantially all CPM’s assets to Dr. Dimitri Koumanis “without receiving consideration of value in return.” Id. at ¶ 22. On September 2, 2022, the Warren County Supreme Court entered a judgment of divorce which incorporated the separation agreement. Id. at ¶ 28. Six days later, on September 8, 2022, Dr. Cline executed a warranty deed transferring the Bolton Property to Ms. Cline. Id. at ¶ 30. However, the deed was not recorded in the clerk’s office until November 18, 2022. Id. at ¶ 31. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 8 of 22
- 9 - While the separation agreement indicated that Ms. Cline was responsible for any debt associated with the Bolton Property, the Complaint alleges that Dr. Cline continued to pay taxes on the Bolton Property, as well as homeowners’ insurance and homeowners association dues. Id. at ¶¶ 46-48. According to the Complaint, Dr. Cline acts as caretaker of the Bolton Property, intermittently sleeps and stays at the Bolton Property, and has listed the Bolton Property as his address for bank applications and in certain federal tax returns. Id. at ¶¶ 40-51. Further, on September 6, 2022, four days after the judgment of divorce, Dr. Cline applied for a home equity line of credit (“HELOC”) on the Bolton Property with a credit limit of $300,000. Id. at ¶¶ 32-34. As part of the application, Dr. Cline represented that he owned the Bolton Property, that title to the Bolton Property was held solely by him, and that he was married. Id. at ¶ 33. $100,000 was advanced from the HELOC to Dr. Cline in March of 2025, and $50,000 was advanced in April of 2025. Id. at ¶¶ 37 & 39. With regard to the badges of fraud, the Complaint sufficiently details seven of the eleven factors: (1) the transfer was to an insider, Dr. Cline’s ex-wife, Ms. Cline; (2) Dr. Cline retained possession and control of the Bolton Property after the transfer to Ms. Cline; (3) the transfer was concealed in connection with the HELOC; (4) Dr. Cline was aware of the potential CSA lawsuit at the time of the transfer; (5) the transfer was for substantially all of Dr. Cline’s assets; (6) Dr. Cline concealed his assets; and (7) the value received by Dr. Cline for the CPM practice was not reasonably equivalent to the value of the Bolton Property transferred to Ms. Cline. See Dkt. No. 4 at pp. 25-26. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 9 of 22
- 10 - Having reviewed the detailed facts alleged in the Complaint, the Court concludes that it plausibly alleges a fraudulent transfer with actual intent to hinder, delay, or defraud the United States, or that the acts were done through constructive fraud, all in violation of 28 U.S.C. § 3304 and NY DCL § 276. The allegations also satisfy the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Under both federal and state law, to state an actual fraudulent transfer claim with Rule 9(b) particularity, a party must ordinarily allege: (1) the property that was conveyed; (2) the timing and, if applicable, frequency of the transfer; and (3) the consideration paid for the transfer. See United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F.Supp.2d 198, 221 (S.D.N.Y. 2002). Under Rule 9(b), “malice, intent, knowledge, or other condition of mind . . . may be averred generally.” Stated another way, “Rule 9(b) does not require omniscience; rather the Rule requires that the circumstances of the fraud be pled with enough specificity to put defendants on notice as to the nature of the claim.” United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 745 (10th Cir. 2018) (citations omitted). This standard has been satisfied with the Government’s pleadings. The arguments presented by Ms. Cline in her Motion to Dismiss that the Court lacks jurisdiction based upon defective service of process, Dkt. No. 17 at p. 3, are now moot, as both Defendants accepted service of the Complaint during the most recently held conference. See Dkt. Nos. 14-15. The primary argument made by Defendants that the transfer was not in fact fraudulent, or that the Government’s allegations are not sufficiently supported and are misleading, Dkt Nos. 16-17 & 32-33, are points that will no doubt be the subject of Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 10 of 22
- 11 - discovery in this case, but do not warrant the granting of the Motions to Dismiss which, as noted above, only consider whether the allegations of the Complaint are plausible and sufficiently fact-based. That standard has certainly been met in this case. Dr. Cline claims that there is no proof that he was insolvent at the time of the transfer, Dkt. No. 16 at pp. 2-3, but that argument misreads the statute. Subdivision (a) of § 3304 refers to a debt arising before the transfer, and admittedly it does reference insolvency. However, in the present action the Government is seeking to preserve assets in relation to a judgment that has not yet been imposed, a factual situation covered by subdivision (b) of § 3304, which pertains to transfers without regard to the date of judgment. Under 28 U.S.C. § 3304(b)(1)(A), a transfer can be considered fraudulent if the debtor makes the transfer with the actual intent to hinder, delay, or defraud the United States, and while financial status is one of the enumerated badges of fraud under 28 U.S.C. § 3304(b)(2), there is no requirement of insolvency for a claim of intent to defraud pursuant to this provision. Under 28 U.S.C. § 3304(b)(1)(B), a transfer can also be determined constructively fraudulent where the debtor made the transfer without receiving a reasonably equivalent value in exchange and believed, or reasonably should have believed, that he would incur debts beyond his ability to pay as they became due. Here, the Complaint alleges that Dr. Cline transferred his entire interest in the Bolton Property to his soon-to-be ex-wife, Ms. Cline, and received (or kept) an interest in his medical practice that was of little worth, such that he has now acknowledged that he has no ability to pay a significant civil fine. See generally Compl. The existence of the potential for a fine that was beyond Dr. Cline’s financial reach without ownership of some Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 11 of 22
- 12 - or all of the Bolton Property is alleged to have been known, or reasonably should have been known, to Dr. Cline at the time of the transfer. Id. at ¶¶ 62-63. These allegations are therefore sufficient to withstand the Motions to Dismiss. Defendants also argue that, because the separation agreement which contains the transfer of the Bolton Property was incorporated in the divorce decree issued by Warren County Family Court, then the Federal Government is powerless to alter or effect it. See Dkt. No. 16 at p. 1; Dkt. No. 17 at p. 4; Dkt. No. 32 at pp. 2-3. However, the Government has pointed to case law that holds the opposite. Dkt. No. 23 at p. 5. In United States v. Schippers, the Government alleged that the transfer of assets in a divorce decree constituted fraudulent transfers, and thus “that the subject properties should be applied in full to the restitution . . . owe[d].” 982 F. Supp. 2d 948, 953-54 (S.D. Iowa 2013). The court agreed and held that the “transfers . . . must be set aside as void” because they “were fraudulent in violation of federal laws.” Id. at 954. The court explained that “the transfers of the subject properties through the divorce decree” were made with the “‘actual intent to hinder, delay, or defraud a credit’ under 28 U.S.C. § 3304(b)(1)(A).” Id. The court noted that: the ex-wife was an “insider,” meaning that the ex-wife was “‘a relative of the debtor,’ such as a spouse or family member”; there were several suits brought against the ex-husband before the transfers were made; the ex-husband “transferred substantially all of his assets to” the ex-wife; the ex-husband “did not receive equivalent value for the transfers”; and “the transfer occurred shortly before” the ex-husband “incurred a substantial debt.” Id. (quoting 28 U.S.C. § 3301(5)) (citations omitted). The court also stated that, even if the ex-husband did not commit actual fraud, the government was still Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 12 of 22
- 13 - entitled to recovery because the transfers met the statutory standard for constructive fraud given that the transfers “were absent reasonably equivalent consideration” and the ex- husband “‘believed or reasonably should have believed he would incur debts beyond his ability to pay as they became due.’” Id. at 654 (quoting 28 U.S.C. § 3304(b)(1)(B)(ii)) (citation omitted). Thus, United States v. Schippers, while not binding, is nevertheless persuasive in indicating that a debtor cannot avoid attachment pursuant to the FDCPA merely because the transfer occurs through a divorce decree. For all the foregoing reasons, and for the reasons set forth in the Government’s detailed filings, the Court recommends that the Defendants’ Motions to Dismiss be denied.1 III. STANDARD FOR PREJUDGMENT ATTACHMENT The Government seeks to maintain the status quo while the civil action in this case is pending. To do so, the Government seeks to employ various prejudgment remedies that are identified in the FDCPA, including attachment and sequestration.2 See 28 U.S.C. 1 To the extent that Ms. Cline, in her motion to dismiss, argues in the alternative that, if the case is not dismissed, she is entitled to a ninety-day extension of time to retain counsel or prepare to defend herself pro se, Dkt. No. 17 at p. 5, that request is also denied. 2 The Government sought both a writ of attachment and a writ of sequestration. See generally Dkt. Nos. 3-4. The writ of sequestration was sought in relation to the HELOC allegedly obtained by Dr. Cline on the Bolton Property. See Dkt. No. 4 at pp. 3 (requesting a writ of sequestration “requiring that money owed to Dr. Cline on the loans made to Total Care and Hunter Cline by sequestered and paid to the Clerk of Court”), 4 (stating that “[t]he government is also applying for Writs of Sequestration . . . with respect to loan repayments to Dr. Clines”), & 27 (“The government seeks sequestration of any payments from Hunter Cline or Total Care to Dr. Cline on the loans he funded through HELOC advances totaling $150,000. As of June 7, 2025, the outstanding HELOC balance was $126,693.16 – the total that would be sequestered.”). In response, the Court notes that, both at the hearing on December 9, 2025, and in Dr. Cline’s filings in relation to his Motion to Dismiss, Dr. Cline stated that the HELOC that is the subject of the writ of sequestration sought by the Government has been paid off in full. Dkt. No. 33 at pp. 16 (stating that “the HELOC referenced by the Government has been fully satisfied”) & 21 (letter dated December 5, 2025 from Citizens Bank “in response to [a] request for the payoff amount for [an] Equity Line of Credit” for the Bolton Property and stating that the payoff amount is $0); Tr. at pp. 20-21 (containing statements by Dr. Cline that the HELOC was paid off). Consequently, the Court exercises its discretion to deny the Government’s request for a Writ of Sequestration. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 13 of 22
- 14 - §§ 3101, 3102, & 3105. The FDCPA provides the exclusive civil procedure for the United States to seek prejudgment remedies. 28 U.S.C. § 3001(a)(2). “The purpose of these prejudgment remedies is to establish ‘security to satisfy such judgment, and interests and costs, as the United States may recover on such claim’ for a debt.” United States v. LabQ Clinical Diagnostics, LLC, 771 F. Supp. 3d 401, 430 (S.D.N.Y. 2025) (quoting 28 U.S.C. § 3102(a)). A court may only grant such a remedy “if the United States shows reasonable cause to believe” that, inter alia, the debtor “has or is about to assign, dispose, remove, conceal, ill treat, waste, or destroy property” or “to convert the debtor’s property into money, securities, or evidence of debt in a manner prejudicial to the United States,” “with the effect of hindering, delaying, or defrauding the United States.” Id. (quoting 28 U.S.C. § 3101(b)(1)(B), (C)). Determining whether to apply pre-judgement remedies in the present case requires a multilevel analysis. First, the United States must show “probable validity of the claim for a debt and the right . . . to recover what is demanded in the application.” 28 U.S.C. § 3101(c); see United States v. LabQ Clinical Diagnostics, LLC, 771 F. Supp. 3d at 430, 458. As noted in LabQ, “[e]stablishing the ‘probable validity’ of a claim of debt ‘does not require proof rising to the level of that required at trial.’” United States v. LabQ Clinical Diagnostics, LLC, 771 F. Supp. 3d at 431 (quotation and citation omitted). Rather, the Government need only “meet the probable cause standard,” which “exists when known facts and circumstances are sufficient to warrant a person of reasonable prudence in the belief that an offense has been or is being committed.” Id. (quotations, internal quotation marks, and citation omitted). Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 14 of 22
- 15 - Here, as to the debt owed to the Government, the United States Attorney’s Office references the probable fine that the District Court would impose if it determined that there were violations of the CSA. Dkt. No. 4 at pp. 22 & 30. Thus, the Court considers the merits of the Government’s claim and whether there is probable cause to conclude that a violation of the CSA has occurred and a reasoned belief as to the amount of the fine. As relevant here, the United States’ commencement of Cline #1 centers around prescription practices for three patients, two of whom were married to each other. Cline # 1, Dkt. No. 1 at ¶¶ 55-90. It is alleged that the couple, Patients 1 and 2, began treatment in 2014 with CPM, and over the next several years, Dr. Cline, NP McKenna, and another individual wrote numerous prescriptions for fentanyl, oxycodone, and valium. Id. It is alleged that no effort was made by Defendants to wean the patients off these prescription drugs and that those prescriptions regularly increased. Id. Patients 1 and 2 then moved to Alabama but were unable to find a pain management doctor in their new area, as the people consulted were not willing to prescribe pain medication at the levels that the patients were receiving at CPM. Id. at ¶¶ 63-67. Accordingly, the medial professionals at CPM continued to prescribe medication to the couple for years without regularly seeing them in person and merely consulting with them over the phone. Id. at ¶¶ 67-73 & 79. The CSA Complaint also alleges conduct with relation to a third patient, Patient 3, who was in her seventies and suffered from numerous health issues, including arthritis and COPD, and was a pack-a-day cigarette smoker. Id. at ¶¶ 91- 93. It is alleged that Patient 3 was routinely prescribed hydrocodone, lorazepam, and carisoprodol by CPM and Dr. Cline, even though she was not physically seen or examined by medical Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 15 of 22
- 16 - professionals at CPM from February 17, 2017, to August 15, 2017. Id. at ¶ 95. Instead, her brother appeared at CPM on his sister’s behalf and, on occasion, requested dosage increases, which were granted. Id. Dr. Martin Schaefer is a board-certified pain management specialist who has been retained by the Government in Cline #1 and has provided a sworn affidavit concerning Dr. Cline and his staff at CPM’s prescription methods, which has been attached as part of the Government’s request for prejudgment relief. Dkt No. 3-38. Dr. Schaefer indicated that the opioid dosages for Patients 1 and 2 were excessive, and at no time did the CPM practitioners ever identify or treat any specific source of pain for them. Id. at ¶¶ 21-22. As to CPM’s continued treatment of Patients 1 and 2 after they moved to Alabama, Dr. Schaefer noted that “[p]rescribing to patients who are not geographically local to the prescribers, who were not receiving routine physical examinations, for extended periods of time is far outside the usual course of professional practice.” Id. at ¶ 30. With regard to Patient 3, Dr. Schaefer noted that the combination of opioids, benzodiazepines, and carisoprodol is extremely dangerous for her, especially as she was not routinely physically examined at CPM, and that her reason for not coming in was not supported by CPM’s records. Id. at ¶¶ 52-60. In summary, Dr. Schaefer opined that Defendants Cline and NP Mckenna “failed to meet the professional education, licensing, credentialing, and continuing educational standards for medical practitioners in the pain management field.” Id. at ¶ 61. Further, it is Dr. Schaefer’s opinion that “[t]he controlled substance prescriptions written for the three patients at issue were not written for legitimate medical purposes within the usual Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 16 of 22
- 17 - course of a professional practice.” Id. No contrary expert opinion has been submitted to the Court by the Defendants in opposition to the present Motion for prejudgment remedies, and in fact the Defendants have presented no arguments against the likelihood of the Government being successful in the CSA Complaint. Therefore, the Court finds in favor of the Plaintiff on this first step. Having determined that the government has established a probable violation of the CSA, the United States must next demonstrate the probable validity of the amount of the debt claimed. See United States v. LabQ Clinical Diagnostics, LLC, 771 F. Supp. 3d at 457-59. Once again, “[e]stablishing . . . ‘probable validity’. . . requires only that the Government meet the probable cause standard.” Id. at 431 (quotations omitted). The United States can satisfy this element even where the parties dispute the ability of the United States to obtain the full amount of damages that it seeks to attach. See, e.g., id. at 467; United States v. Miga, 2021 WL 2169486, at *2 (N.D. Tex. Apr. 23, 2021), report and recommendation adopted, 2021 WL 2167069 (N.D. Tex. May 27, 2021). Here, as noted in the Government’s brief, the maximum fine is based upon the number of prescriptions that were issued multiplied by a fine rate of up to $82,950 per prescription. Dkt. No. 4 at pp. 2 & 22. In the present case, the Government alleges that there were 344 improper prescriptions issued, with 21 having been written by Dr. Cline himself. Id. at pp. 21-22. The maximum fine would be over $1,500,000 for just the 21 prescriptions written by Dr. Cline, and would total $28,534,800 for all 344 prescriptions. Id. Of course, the actual fine imposed upon a finding of such CSA violations is based upon four factors—level of culpability, public harm, profits from the violation, and Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 17 of 22
- 18 - defendant’s ability to pay—and is within the discretion of the District Court, which in this case would be with Senior District Judge Glenn T Suddaby. See Advance Pharmaceutical Inc. v. United States, 391 F.3d at 399. The Government notes that, in somewhat similar cases, the fines have ranged from $200,000 to $1,200,000. See Dkt. No. 4 at p. 30. A fine within the range predicted by the Government of $875,000, or half the total value of the Bolton Property, is a reasonable probability in this case. Having determined that the government has a reasonable probability of success on the CSA claim, and further that the District Court would likely impose a substantial fine against Dr. Cline pursuant to the CSA statute, the final issue is whether the Government has, in its papers, shown “reasonable cause” to believe that, inter alia: (1) Dr. Cline has or is about to (a) “assign, dispose, remove, conceal, ill treat, waste, or destroy property” or (b) convert his “property into money, securities, or evidence of debt in a manner prejudicial to the United States”; and (2) that Dr. Cline’s action has “the effect of hindering, delaying, or defrauding the United States.” 28 U.S.C. § 3101(b)(1)(B) & (C). Notably, “[t]he statute does not require that the debtor intend to hinder or defraud the Government”; instead, “[t]he sole consideration is the effect of the debtor’s actions.” United States v. LabQ Clinical Diagnostics, LLC, 771 F. Supp. 3d at 431, 462 (quotations omitted) (emphasis added). Consequently, “[i]t is . . . immaterial whether Defendants intended to hide assets from the Government,” as “[t]he relevant question is whether the transfer[] had or would have the effect of hindering the Government’s asset recovery efforts.” Id. at 463. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 18 of 22
- 19 - At this preliminary stage, the Court concludes that the Government has satisfied its burden, primarily for the reasons identified in the preceding analysis in connection with the Defendants’ Motions to Dismiss. The Government has now produced, in evidentiary form, records and testimony regarding: Dr. Cline’s notification by the Government of its investigation into CPM’s prescription practices and the likely possibility of significant fines; the subsequent transfer of Dr. Cline’s primary asset, the Bolton Property, to Ms. Cline; the fact that, after the separation agreement and the purported transfer of the Bolton Property, Dr. Cline continued to utilize and maintain the Bolton Property; Dr. Cline’s obtaining of the HELOC on the Bolton Property and representation to the bank in the application for the HELOC that he was the sole owner of the Bolton Property; Dr. Cline’s withdrawal of $150,000 from the HELOC in the years after the transfer; Dr. Cline’s failure to disclose that asset or source of income in connection with the discovery responses provided to the Government in the CSA case, Cline #1; and Dr. Cline’s defense under the CSA statute that he has no substantial assets or ability to pay a fine, a fact which confirms that the CPM practice was not a substantial asset. See generally Dkt. No. 3. Here, the Court need not predict what the Defendant will potentially do with his assets in the future, as the transfer of the Bolton Property has already occurred, and that act will potentially have the effect of hindering the Government’s efforts to collect a substantial fine. Therefore, I find, based on the evidence before the Court, that the Government has satisfied the necessary standard to warrant the prejudgment remedy of attachment. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 19 of 22
- 20 - While Ms. Cline has objected to her inclusion in this case on the basis that there is presently no allegation that she engaged in any fraudulent conduct, Dkt. Nos. 17 & 32, the Court notes that federal courts have granted applications for prejudgment remedies even where such applications may affect a third party. See, e.g., United States v. DuBois, 2023 WL 9692124 (S.D. Fla. Nov. 14, 2023). In United States v. DuBois, a fraudulent transfer action was brought by the government against a delinquent taxpayer alleging “that [he] fraudulently transferred a valuable asset . . . to [his m]other for no consideration in order to evade a $1.2 million tax judgment.” Id. at *1. In reviewing the government’s ex parte application seeking a prejudgment writ of attachment, the court noted that, “[a]lthough the [g]overnment currently holds a $1.2 million tax judgment against [the son], it holds no such judgment against [the m]other.” Id. at *2. The court further noted that “[t]he [g]overnment’s claim of a ‘debt’ against [the m]other . . . rest[ed] entirely upon the fraudulent transfer claim.” Id. Nevertheless, the court found that the government had satisfied its burden of showing the probable validity of the government’s claim for debt, reasonable cause to believe the debtor was dissipating the asset, and the specific amount of debt claimed. Id. at *2-6. As such, the court permitted the government to proceed with its claim of entitlement to one half of the proceeds that the son had transferred to the mother. Id. at *6. As one final point, the Court is not unmindful of the arguments made by the Defendants in this case, and particularly those of Ms. Cline. However, the Government has established, based on the present record, its entitlement to the prejudgment remedy of attachment. With that said, “[t]he court may at any time on its own initiative or the motion Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 20 of 22
- 21 - of any interested person, and after such notice as it may require, make an order denying, limiting, conditioning, regulating, extending, or modifying the use of any enforcement procedure.” 28 U.S.C. § 3013. Similarly, “the debtor may submit a motion to the court for a reduction of the amount of the attachment or its dissolution.” 28 U.S.C. § 3102(g)(1). “[I]f after a hearing the court finds that the amount of the attachment is excessive or unreasonable or if the attachment is for an amount larger than the sum of the liquidated or ascertainable amount of the debt and the amount of interest and costs likely to be taxed,” “[t]he court shall order a part of the property to be released.” 28 U.S.C. § 3102(g)(2). IV. CONCLUSION For the reasons stated herein, it is hereby RECOMMENDED, that the Defendants’ Motions to Dismiss (Dkt. Nos. 16-17 & 32-33) be DENIED; and it is further ORDERED, that the Government’s Application for a Prejudgment Writ of Attachment in the amount of $875,000.00 (Dkt. Nos. 3-4) is GRANTED; and it is further ORDERED, that the Government’s Application for a Prejudgment Writ of Sequestration (Dkt. Nos. 3-4) is DENIED; and it is ORDERED, that the Clerk of the Court serve a copy of this Report- Recommendation and Order upon the parties to this action. Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 21 of 22
- 22 - Pursuant to 28 U.S.C. § 636(b)(1), the parties have fourteen (14)3 days within which to file written objections to the foregoing report. Such objections shall be filed with the Clerk of the Court. FAILURE TO OBJECT TO THIS REPORT WITHIN FOURTEEN (14) DAYS WILL PRECLUDE APPELLATE REVIEW. Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993) (citing Small v. Sec’y of Health and Human Servs., 892 F.2d 15 (2d Cir. 1989)); see also 28 U.S.C. § 636(b)(1); F ED . R. CIV . P. 72 & 6(a). Dated: March 11, 2026 Albany, NY 3 If you are proceeding pro se and are served with this Order by mail, three additional days will be added to the fourteen-day period, meaning that you have seventeen days from the date the order was mailed to you to serve and file objections. F ED. R. CIV. P. 6(d). If the last day of that prescribed period falls on a Saturday, Sunday, or legal holiday, then the deadline is extended until the end of the next day that is not a Saturday, Sunday, or legal holiday. FED. R. C IV. P. 6(a)(1)(C). Case 1:25-cv-01576-GTS-DJS Document 39 Filed 03/11/26 Page 22 of 22
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