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United States v. Hofstetter

United States District Court, E.D. Tennessee

September 14, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
SYLVIA HOFSTETTER, Defendant.

          MEMORANDUM AND ORDER

          Clifford Shirley, Jr. United States Magistrate Judge

         All pretrial motions in this case have been referred to the undersigned pursuant to 28');">28 U.S.C. § 636(b) for disposition or report and recommendation regarding disposition by the District Court as may be appropriate. This case is before the Court on Defendant Hofstetter's Motion to Reconsider Detention Order and Open Detention Hearing [Doc. 243], filed on July 28');">28, 2017. The Government responded [Doc. 246] in opposition to the motion on August 11, 2017. The parties appeared for a hearing on this motion on August 17, 2017. Assistant United States Attorneys Tracy L. Stone and Anne-Marie Svolto appeared on behalf of the Government. Attorney Charles C. Burks, Jr., represented Defendant Hofstetter, who was also present. Following the motion hearing, the Defendant filed a reply brief [Doc. 253] on August 22, 2017. The question of whether the Court should reopen Defendant Hofstetter's detention hearing is now ripe for adjudication.

         Although the Defendant has not demonstrated that new, material evidence exists to permit the reopening of the detention hearing pursuant to the Bail Reform Act, the undersigned finds that the Defendant's continued detention until trial violates the Due Process Clause of the Fifth Amendment. The Court determines that the Defendant should be RELEASED on conditions. However, the Court also finds that the Government will likely appeal this ruling. Accordingly, the Defendant's release will be STAYED for fourteen days from the entry of this Memorandum and Order to give the Government time to appeal, and the Defendant's release will remain stayed during the pendency of the appeal, if one is taken. The Court will hold a hearing on the appropriate conditions of release either at the end of the fourteen days, if the Government does not appeal, or upon the conclusion of the appeal, if the ruling herein is affirmed.

         I. BACKGROUND AND POSITIONS OF THE PARTIES

         Defendant Hostetter first appeared for arraignment on March 10, 2015, and was temporarily detained [Doc. 7] pending her detention hearing on March 13, 2015. At her detention hearing, the undersigned found [Doc. 22] that a rebuttable presumption applies in the Defendant's case and that even though the Defendant presented evidence to counter the presumption, a serious risk exists that the Defendant will not appear as required. Accordingly, the Court found, by a preponderance of the evidence, that the Defendant poses a flight risk and ordered that she be detained pending trial. The Defendant has now been detained for thirty-one months, during which time the Government has twice sought superseding indictments that added new defendants and altered the charges against Defendant Hofstetter. Moreover, AUSA Stone informs the Court that the Government will seek a third superseding indictment before the end of this year. The Court has continued Defendant Hofstetter's trial twice over her objection[1" name="FN1" id= "FN1">1] [Docs. 100 & 251], with the most recent continuance occurring on August 17, 2017, when the Court continued the trial to October 16, 2018.[2]

         Defendant Hofstetter argues [Doc. 243] that her continued detention in this case violates her right to the due process of law under the Fifth Amendment.[3] She asks the Court to reopen her detention hearing to allow her to present evidence of her changed circumstances, which she contends weigh in favor of her release on conditions.

         The Government contends [Doc. 246] that Defendant Hofstetter should remain in pretrial detention. First, the Government maintains that the Defendant has not demonstrated a basis to reopen her detention hearing pursuant to the Bail Reform Act, because she has not shown the existence of new evidence that has a material bearing upon whether she can be released on conditions. See 18 U.S.C. § 3142(f)(2). It asserts that the length of detention is not new material evidence under the Act, because it is not relevant to whether she will flee or be a danger to the community. Second, the Government argues that an examination of the Second Circuit's four-factor test reveals that the instant Defendant's thirty-one months of pretrial detention do not constitute a due process violation, particularly because the prosecution is not responsible for the delay in the trial. Thus, the Government asserts that the Defendant has failed to demonstrate a basis for reopening her detention hearing, either on statutory or constitutional grounds.

         In reply [Doc. 253], Defendant Hofstetter maintains that the Government's arguments relating to the Bail Reform Act are primarily matters to be taken up at the reopened detention hearing, not factors to be weighed in determining whether the detention hearing can be reopened in the first instance. Moreover, she argues that if allowed a reopened detention hearing, she will present evidence of her changed circumstances, such as the fact that her passport was seized by the Government, that the Government has shut down the pain clinics at issue in this case, and that the Court has found her to be indigent. Finally, the Defendant acknowledges that, if granted a reopened detention hearing, she faces a rebuttable presumption that she cannot be released on conditions. However, she contends that the evidentiary hurdle to rebut this presumption is low and the burden of persuasion remains with the Government at all times. She argues that the Court should reopen the detention hearing and give her the opportunity to show that conditions exist that would satisfy the Court that she will appear as required and will not be a danger to others.

         II. ANALYSIS

         The Fifth Amendment to the United States Constitution provides, in pertinent part, that “[n]o person shall be . . . deprived of life, liberty, or property, without due process of law[.]” “In our society liberty is the norm, and detention prior to trial or without trial is the carefully limited exception.” United States v. Salerno, 1 U.S. 739');">481 U.S. 739, 755 (1987). However, our Supreme Court has concluded that pretrial detention pursuant to the Bail Reform Act, 18 U.S.C. § 3141, et seq., is just such an exception and that the Act does not offend the Due Process Clause of the Fifth Amendment. Id. In so holding, the Supreme Court points to three aspects of the Bail Reform Act, which insure that it serves a regulatory, rather than a punitive, purpose: (1) The Act limits the possibility of detention to persons charged with “the most serious of crimes[, ]” to include serious drug offenses; (2) the Act entitles the accused to a prompt detention hearing; and (3) “the maximum length of pretrial detention is limited by the stringent time limitations of the Speedy Trial Act.” Id. at 747. With regard to this third prong, the Supreme Court expressed “no view as to the point at which detention in a particular case might become excessively prolonged, and therefore punitive, in relation to Congress' regulatory goal.” Id. at 747, n.4.

         In the instant case, the Defendant asks the Court to find that, although no Speedy Trial violation is alleged in this case, the length of her pretrial detention violates substantive due process.[4] She argues that because of this due process violation, the Court should reopen her detention hearing to give her the opportunity to show that there are now conditions on which she could be released. The Court examines whether either a statutory or a constitutional basis exists for the Defendant's release.

         A. Bail Reform Act

         Although the Defendant does not ask the Court to reopen her detention hearing pursuant to the Bail Reform Act, the Court first considers whether there is a statutory basis for the Defendant's release. The Bail Reform Act permits the Court to reopen a detention hearing “at any time before trial if [it] finds that information exists that was not known to the movant at the time of the hearing and that has a material bearing on the issue [of] whether there are conditions of release that will reasonably assure the appearance of such persons as required and the safety of any other person and the community.” 18 U.S.C. § 3142(f)(2). In the instant case, the Defendant alleges that since the time of her March 13, 2015 detention hearing, the following circumstances have changed: (1) the Government has seized her passport, (2) the Government has shut down the pain clinics at issue in this case, and (3) the Government has seized all her assets and she is now indigent. She maintains that due to these changed circumstances, she is no longer a flight risk or a danger, and that she can be released on conditions. The Government argues that the length of the Defendant's pretrial detention is not a factor to be considered in evaluating whether to reopen a detention hearing under the Bail Reform Act. It also maintains that none of the circumstances advanced by the Defendant is new and/or material.

         As an initial matter, the Court agrees with the Government that the sheer length of time that a defendant has spent in pretrial detention is not a basis for reopening a detention hearing under the Act. United States v. Mohammad, No. 3:15-cr-358, 2017 WL 2365247, *6 (N.D. Ohio May 31, 2017); see also United States v. Hare, 873 F.2d 796, 799 (5th Cir. 1989) (holding that the length of detention, including the projected term of detention, is not a reason to reopen a detention hearing because it is not material to dangerousness or flight risk). Prolonged pretrial detention can be a basis for the Court to reconsider the Defendant's detention for constitutional (rather than statutory) reasons, which the undersigned does in section B. below.

         The Defendant first alleges, as a changed circumstance, that the Government has seized her passport. The Court finds that the Defendant could have offered to surrender her passport to the United States Probation Office at the 2015 detention hearing. Thus, the ability to place her passport out of her control was information that was known to the Defendant and could have been offered as a proposed condition of release at the time of her detention hearing.

         Second, the Defendant asserts that the Government has closed the clinics at issue in this case. At the detention hearing, the Court found that no conditions of release could prevent the Defendant's continued involvement with the clinics in this case, because the Defendant ran these clinics from her home and through other people. [Doc. 28');">28, Trans. of Detn Hg, p. 28');">284] The Court also found that the Defendant had not proffered any other type of employment, other than running the instant clinics or employment in some type of medical management job. The Court found that these circumstances weighed in favor of detention, because the Court did not know what type of employment the Defendant would have or how she would maintain her lifestyle, if prohibited from working in the clinics. [Doc. 28');">28, p.28');">285]

         While the closure of the three clinics involved in this case would appear to be information unknown to the Defendant at the time of the detention hearing, [5] the Court questions whether this circumstance has a material bearing upon the existence of conditions of release that would assure the Defendant's appearance as required. At the detention hearing, the Court's underlying concern with regard to the clinics was two-fold: (1) Could the Court prevent the Defendant from committing any crimes while on release?, [6] and (2) Could the Defendant secure some type of employment outside of the medical management area? While the Court's concern with the Defendant continuing to work at the clinics related to her charges is alleviated by their closure, the Court observes now, as it did at the detention hearing, that the Defendant worked in pain clinics in Florida, where she continues to have many contacts, and she came to this district to start the same type of clinics in Tennessee. The Defendant's ability to move to a new location and to start up a pain clinic is not necessarily hampered by the closure of the instant clinics. Additionally, the fact that the clinics related to the instant charges are now closed is not material to the question of where the Defendant will work if released. Accordingly, the fact that the clinics are closed is not material to whether there are conditions that will prevent the Defendant from fleeing.

         Finally, the Defendant asserts that the Government has seized all of her assets and that she does not have the means with which to flee. In support of this factor, the Defendant argues that the Court has now found her to be indigent and to qualify for appointed counsel. At the detention hearing, Special FBI Agent Andrew Chapman testified that six million dollars of drug proceeds from the instant alleged drug conspiracy could not be located or explained by the Government. [Doc. 28');">28, p.23-24] The Court relied, in part, on this testimony to find that Defendant Hofstetter apparently had the means with which to flee. [Doc. 28');">28, p.135-36] At the August 17, 2017 motion hearing, AUSA Stone stated that “large sums of money” that are proceeds from the alleged criminal conspiracy are still missing in this case.

         The Court questions whether the seizure of her assets is a circumstance that was unknown to the Defendant at the detention hearing. The undersigned suspects that the Government had already seized the bulk of the Defendant's assets at the time of her detention hearing. More importantly, the Court finds that the Defendant's present indigent status does not change the fact that a large amount of the drug proceeds in this case remain missing and potentially assessable by the Defendant were she to be released. The fact that she does not have income and/or funds in a known bank account with which to retain counsel does not foreclose the possibility that the Defendant has access to hidden accounts or stashes of money. Accordingly, the Court finds that the Defendant's present indigent status is does not carry the day, with regard to whether there are conditions of release that could assure her presence at trial.

         Thus, the Court finds no basis to reopen the Defendant's detention hearing pursuant to the Bail Reform ...


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