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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 1 of 7
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`GARY M. RESTAINO
`United States Attorney
`District of Arizona
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`KEVIN M. RAPP (Ariz. Bar No. 014249, kevin.rapp@usdoj.gov)
`MARGARET PERLMETER (Ariz. Bar No. 024805, margaret.perlmeter@usdoj.gov)
`PETER S. KOZINETS (Ariz. Bar No. 019856, peter.kozinets@usdoj.gov)
`ANDREW C. STONE (Ariz. Bar No. 026543, andrew.stone@usdoj.gov)
`Assistant U.S. Attorneys
`40 N. Central Avenue, Suite 1800
`Phoenix, Arizona 85004-4408
`Telephone (602) 514-7500
`
`DAN G. BOYLE (N.Y. Bar No. 5216825, daniel.boyle2@usdoj.gov)
`Special Assistant U.S. Attorney
`312 N. Spring Street, Suite 1400
`Los Angeles, CA 90012
`Telephone (213) 894-2426
`
`NICOLE M. ARGENTIERI
`Acting Assistant Attorney General
`Criminal Division, U.S. Department of Justice
`
`AUSTIN M. BERRY (Texas Bar No. 24062615, austin.berry2@usdoj.gov)
`U.S. Department of Justice
`Child Exploitation and Obscenity Section
`1301 New York Avenue, NW, 11th Floor
`Washington, D.C. 20005
`Telephone (202) 412-4136
`Attorneys for Plaintiff
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF ARIZONA
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`No. CR-18-422-PHX-DJH
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`POSITION OF THE UNITED STATES
`REGARDING JURY
`DETERMINATION OF ANY
`AMOUNT OF FORFEITURE OF
`FINANCIAL ASSETS
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`Plaintiff,
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`v.
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`United States of America,
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`Michael Lacey, et al.,
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`Defendants.
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 2 of 7
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`INTRODUCTION
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`The jury in this action began deliberating on November 7, 2023, and deliberations
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`remain ongoing. In the event that the jury returns a verdict of guilty on some or all counts,
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`Defendants have requested that, pursuant to Rule 32.2(b)(5)(A), the jury be retained to
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`determine the nexus between any counts of conviction and the specific property alleged to
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`be subject to forfeiture.
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`The United States and Defendants have submitted competing proposed forfeiture
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`jury instructions and Special Verdict Forms. After reviewing these proposed documents,
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`the Court directed the parties to brief the question of whether the jury should be asked to
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`determine the amount of any nexus between the counts of conviction and certain seized
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`financial accounts the government seeks forfeiture of.
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`As described herein, the government submits that Defendants are not entitled to such
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`an “amount” instruction, and while such an instruction would not necessarily be erroneous,
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`to the extent it risks jury confusion, the Court can provide the jury with the unmodified
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`Special Verdict Form as proposed by the United States, and Defendants may raise any
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`challenges to the amounts of forfeiture through post-verdict motion practice.
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`BACKGROUND
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`The Superseding Indictment (the “SI”) in this action includes two forfeiture
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`allegations and provides notice of a range of assets which the United States may seek
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`forfeiture of in the event of one or more defendant’s conviction on a relevant count. In
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`addition, the United States filed two bills of particular (Docs. 281, 820), identifying further
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`assets for which the government might seek forfeiture.
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`Defendants have indicated that, in the event they are convicted on a relevant count,
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`they seek to retain the jury to determine forfeiture of any specific assets pursuant to Federal
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`Rule of Criminal Procedure 32.2(b)(5)(A). As previously noted, the United States expects
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`that a forfeiture phase before the jury would take approximately one-half to one trial day,
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 3 of 7
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`as the United States would call two witnesses, and Defendants have indicated that they
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`expect to call two defense witnesses.
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`One November 1, 2023, the United States filed its proposed forfeiture jury
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`instructions and a proposed forfeiture Special Verdict Form. (Docs. 1935, 1936.) On
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`November 6, 2023, the Defendants filed objections to the United States’ proposed jury
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`instructions and special verdict form, Docs. 1939, 1940, to which the United States
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`responded on the same day. (Doc. 1943.) On November 7, 2023, the Court heard argument
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`on forfeiture, and directed the parties to brief the question of whether the jury should be
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`asked to determine the amount of any nexus between the counts of conviction and certain
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`seized financial accounts the government seeks forfeiture of.
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`POSITION OF THE UNITED STATES
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`Statutory Structure for Post-Conviction Criminal Forfeiture
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`The United States has acknowledged that, where a defendant makes a timely request
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`to retain the jury in the event of a conviction, such a defendant has a statutory right to a
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`jury determination on the limited nexus question as set forth in Rule 32.2(b)(5)(A).
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`Pursuant to Rule 32.2(b)(5)(B), a jury’s role in the forfeiture phase is solely to
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`determine “whether the government has established the requisite nexus between the
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`property and the offense.” As such, by its terms, the jury is solely tasked with determining
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`the existence of such a nexus, not any amount. See United States v. Tedder, 403 F.3d 836,
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`841 (7th Cir. 2005) (“Although Fed.R.Crim.P. 32.2 offers the defendant a jury trial, this
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`provision (unlike the sixth amendment) is limited to the nexus between the funds and the
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`crime; Rule 32.2 does not entitle the accused to a jury's decision on the amount of the
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`forfeiture.”); see also United States v. Mongol Nation, 56 F.4th 1244, 1252 (9th Cir. 2023)
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`(“Where, as here, the Government seeks forfeiture of specific property, the factfinder must
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`determine whether the Government has established the requisite nexus between the
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`property and the offense.” (citing Rule 32.2)).
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 4 of 7
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`The Seventh Circuit model jury instructions define this “nexus” as follows: “In
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`order to establish a ‘nexus’ between the property alleged to be forfeitable and the offense
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`giving rise to the forfeiture allegation, the government must establish a connection between
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`the property and the offense. The connection must be more than incidental, but the
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`connection need not be substantial.” See William J. Bauer Pattern Criminal Jury
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`Instructions of the Seventh Circuit (2023 Ed.), at 432 (Definition of Nexus Instruction).
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`The notes to this model instruction go on to note that “[f]or the most part, the nexus
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`requirement of the Rule will be met under the statutory requirement of what property is
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`subject to forfeiture.” Id. Other circuits have similarly recognized that this nexus is defined
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`by statute for each offense for which forfeiture is authorized. See e.g., United States v.
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`Capoccia, 503 F.3d 103, 115 (2d Cir. 2007) (“The ‘requisite nexus’ for a violation of 18
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`U.S.C. § 2314 is set forth in 18 U.S.C. § 981(a)(1)(C), which subjects to civil forfeiture
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`‘[a]ny property, real or personal, which constitutes or is derived from proceeds traceable
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`to a violation of [various sections of Title 18] or any offense constituting ‘specified
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`unlawful activity’ (as defined in section 1956(c)(7) of this title), or a conspiracy to commit
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`such offense.’”).
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`Furthermore, even where the jury finds such a nexus, any such specific property is
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`not automatically forfeited by the jury’s verdict. The government must first apply to the
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`Court for a preliminary order of forfeiture (the “preliminary order”) and provide notice of
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`the same to third parties. See Fed. R. Crim. P. 32.2(b)(2)(A) (“If the [finder of fact] finds
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`that the property is subject to forfeiture, [the court] must promptly enter a preliminary
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`order of forfeiture ... directing the forfeiture of specific property.”); United States v.
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`Monsanto, 491 U.S. 600, 607 (1989) (“Congress could not have chosen stronger words to
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`express its intent that forfeiture be mandatory in cases where the statute applied.”);
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`United States v. Newman, 659 F.3d 1235, 1240 (9th Cir. 2011) (“When the Government
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`has met the requirements for criminal forfeiture, the district court must impose criminal
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`forfeiture, subject only to statutory and constitutional limits”); id. (“[T]he district court
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 5 of 7
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`has no discretion to reduce or eliminate mandatory criminal forfeiture”).
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`While the preliminary order forfeits a defendant’s interest in the property, it does
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`not include a determination as to the ownership of the property subject to forfeiture. That
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`determination is deferred to the ancillary proceeding, in which third-party interests in the
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`property are considered and resolved. See Advisory Committee Notes to Federal Rule of
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`Criminal Procedure 32.2 (2000 Adoption) (“Under [the statutory forfeiture scheme first
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`enacted in 1984,] the court orders the forfeiture of the defendant’s interest in the property
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`- whatever that interest may be -- in the criminal case. At that point, the court conducts a
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`separate proceeding in which all potential third party claimants are given an opportunity to
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`challenge the forfeiture by asserting a superior interest in the property. This proceeding
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`does not involve re-litigation of the forfeitability of the property; its only purpose is to
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`determine whether any third party has a legal interest in the forfeited property.”); United
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`States v. Nava, 404 F.3d 1119, 1132 (9th Cir. 2005) (district court properly instructed jury
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`that questions of ownership “were not before them”); United States v. 101 Houseco, LLC,
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`22 F.4th 843, 847 (9th Cir.), cert. denied, 143 S. Ct. 209, 214 L. Ed. 2d 81 (2022) (“The
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`law appears settled that an ancillary proceeding constitutes the only avenue for a third party
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`claiming an interest in seized property.” (citing United States v. Lazarenko, 476 F.3d 642,
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`648 (9th Cir. 2007))).
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`Finally, in the event that a preliminary order of forfeiture is entered and no third-
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`party established a superior interest through an ancillary proceeding, a defendant may seek
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`to challenge a forfeiture under the Excessive Fines Clause of the Eighth Amendment. This
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`too is a question for the Court, not the jury. See, e.g., United States v. Derman, 211 F.3d
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`175, 184 (1st Cir. 2000) (whether property comprises one parcel or two and whether
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`forfeiture would violate Eighth Amendment are issues for court, not jury); superseded by
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`statute as stated in United States v. Ferrario-Pozzi, 368 F.3d 5 (1st Cir. 2004)).
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 6 of 7
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`The Jury Need Not Consider the Amount of Any Nexus For Specific Assets
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`In light of the statutory structure described briefly above, the United States submits
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`that the Court can provide the government’s original proposed Special Verdict Form, which
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`would eliminate the risk of any jury confusion as to calculation of forfeiture amounts.
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`To the extent that the jury returns a nexus finding on any particular seized financial
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`asset, and if one or more Defendants believe that the United States failed to offer sufficient
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`evidence of such a nexus, or alternately, believe that the United States only offered
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`evidence of a nexus up to a lesser amount, the appropriate method for challenging such a
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`verdict would be through motion practice pursuant to Rules 29 and/or 33, or through a
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`challenge under the Eighth Amendment – all questions which would be addressed by the
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`Court. Motion practice pursuant to Rule 29 and/or 33 could be resolved expeditiously based
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`on the trial record, and thus could be addressed in advance of any ancillary proceeding
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`considering third-party assets. This would aid judicial economy, as motion practice based
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`on the trial record would not involve third parties and potential discovery-related delays
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`that an ancillary proceeding could entail.
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`Respectfully submitted this 8th day of November, 2023.
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`GARY M. RESTAINO
`United States Attorney
`District of Arizona
`
`
`NICOLE M. ARGENTIERI
`Acting Assistant Attorney General
`Criminal Division, U.S. Department of Justice
`
`
` /s/
`
`KEVIN M. RAPP
`MARGARET PERLMETER
`PETER KOZINETS
`ANDREW STONE
`DAN G. BOYLE
`Assistant U.S. Attorneys
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`AUSTIN M. BERRY
`Trial Attorney
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`Case 2:18-cr-00422-DJH Document 1953 Filed 11/08/23 Page 7 of 7
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`CERTIFICATE OF SERVICE
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`I hereby certify that on November 8, 2023, I electronically transmitted the attached
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`document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a
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`Notice of Electronic Filing to the CM/ECF registrants who have entered their appearance
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`as counsel of record.
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`
`s/ Dan G. Boyle
`Dan G. Boyle
`U.S. Attorney’s Office
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