Case: 1:19-cr-00864 Document #: 747 Filed: 06/12/24 Page 1 of 44 PageID #:26417
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`
`
`
`
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`No. 19 CR 864
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`Judge Thomas M. Durkin
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`v.
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`UNITED STATES OF AMERICA,
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`
`
`RISHI SHAH AND SHRADHA AGARWAL, et
`al.,
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`Defendants.
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`
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`MEMORANDUM OPINION AND ORDER
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`Rishi Shah and Shradha Agarwal move to dismiss the indictment or
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`alternatively for a new trial alleging that the pretrial restraint of their untainted
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`assets violated the forfeiture laws and their Fifth and Sixth Amendment rights. R.
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`488, 490. For the following reasons, the Court denies the motions.
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`Background
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`On November 21, 2019, a federal grand jury returned a superseding indictment
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`charging Shah and Agarwal (“Defendants”) with mail, wire, and bank fraud and Shah
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`with money laundering. Shah Ex. 8007 (R. 14) (“Indictment”). That indictment
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`included forfeiture allegations, stating in relevant part that the grand jury found
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`probable cause to believe that “all right, title, and interest in [certain assets]
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`including but not limited to [certain amounts]” were subject to forfeiture. Id. at pp.
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`49–57. The following day, the government sought a protective order with matching
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`language to preserve the availability of the property allegedly subject to forfeiture,
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`which the Court entered. See R. 11; Shah Ex. 8005 (R. 27) (“11/22/2019 Protective
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`1
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`Order”) (restraining “all right, title, and interest in [certain assets] including but not
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`limited to [certain amounts]”).
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`Shortly after the indictment and the protective order were issued, William
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`Burck and Jonathan Bunge (Quinn Emanuel) entered limited appearances for Shah,
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`and Christina Egan (McGuireWoods) entered a limited appearance for Agarwal. On
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`January 3, 2020, Defendants moved to amend the protective order, asking the Court
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`to unfreeze $10.3 million that Defendants had received in a settlement with their
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`former company (Outcome Health), lenders, and investors so that they could use the
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`funds to pay for their defense. See Shah Ex. 8103 (R. 75-1). The Court denied that
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`motion on April 8, 2020, holding that the settlement did not cleanse the funds of their
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`taint, and thus the funds were unavailable to pay counsel regardless of whether
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`Defendants needed them. See R. 108 at 7. At the end of May 2020, the Court granted
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`Defendants’ request that it allow them until June 30, 2020 to have either current or
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`new counsel appear on their behalf, stating that “[n]o further extensions will likely
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`be granted.” Shah Ex. 8108 (R. 111); Shah Ex. 8109 (R. 112).
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`Defendants engaged new counsel, Hueston Hennigan for Shah and Larson LLP
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`and Blegen & Associates for Agarwal. Shah agreed to pay Hueston Hennigan $4
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`million up front and the remainder of the $6.5 million flat fee following the future
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`sale of Shah’s interests in Alto Pharmacy and Healthfinch. Shah Ex. 8025. Agarwal
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`agreed to pay Larson LLP $2 million up front and agreed to pay Blegen & Associates
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`$250,000 up front and another $100,000 within 90 days or $125,000 thereafter.
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`2
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`Agarwal Ex. 3, 5. Counsel from Quinn Emanuel and McGuireWoods subsequently
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`withdrew, and new counsel appeared for Defendants.
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`Two and half years later, the case proceeded to trial. The trial lasted nearly
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`three months. The performance of Defendants’ counsel during that trial, and their
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`diligent and detailed work leading up to it, was nothing short of extraordinary. As
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`the Court commented at the conclusion of the trial:
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`I would like to say, I’ve been a law clerk for two years, a federal
`prosecutor for 13 years, a defense lawyer for 20, and a judge for 10. So
`I’ve seen a lot of trials. . . . [The] attorneys did an extraordinary job
`representing the defendants in this case. . . . [I]n 45 years, I haven’t seen
`a performance like this, ever. The amount of evidence you marshalled,
`presented to the jury in a way that I think they can understand it. Every
`nuance of every document . . . was examined, sometimes repeatedly by
`the attorneys. But always done professionally [and with] a lot of work
`that went into it. So I hope the defendants, their families, and the agents
`all realize that the work the attorneys did in this case, at least in my
`judgment with the experience I’ve had . . . is unparalleled.
`
`R. 623 (4/5/2023 Trial Transcript) at 10454–55.
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`On April 11, 2023, the jury returned guilty verdicts against Defendants on
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`most of the charges. Following the verdicts, new counsel from Bryan Cave Leighton
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`Paisner LLP appeared for Shah and met with the government about their concern
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`that the protective order’s language was overbroad and had restrained property it
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`shouldn’t have. Shah Ex. 8851.
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`Before diving into the language, it is worth discussing how the protective order
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`came to be. Given the complexity of the potential forfeiture, in July 2019, the
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`prosecution team (then comprised of Assistant United States Attorney Matthew
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`Madden and Department of Justice attorneys William Johnston and Kyle Hankey)
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`3
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`and FBI forensic accountant Megan Poelking reached out to the Department of
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`Justice Money Laundering and Asset Recovery Section (“MLARS”) for guidance about
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`how “to forfeit the traceable proceeds” from the fraudulently obtained 2016 bank
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`loans and 2017 capital raise. Shah Ex. 8800. In October 2019, MLARS assigned one
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`of its attorneys, Daniel Olinghouse, to work with Poelking, and they engaged the
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`United States Marshals Service (“Marshals”) Complex Asset Unit for more
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`assistance.1 Id.; Shah Ex. 8802, 8803. The plan was to “list in the indictment
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`everything our tracing suggests is forfeitable and then seek a post-indictment
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`restraining order of those assets.” Shah Ex. 8805.
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`Poelking was responsible for the tracing analysis. She traced the proceeds of
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`the bank loans and capital raise to Defendants’ entities, Gravitas Holdings, LLC
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`(“Gravitas”) and Jumpstart Ventures II, LLC (“Jumpstart II”), and then to transfers
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`of funds by those entities into certain private equity entities and private companies.2
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`These transfers are called “capital contributions.” Olinghouse was responsible for
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`drafting the forfeiture allegations and the protective order. He drafted the language
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`at the center of this litigation: “all right, title and interest in [the private equity
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`entities and private companies] held by [Gravitas and/or Jumpstart II] including but
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`not limited to [certain amounts] in capital contributions.” He plugged in the amounts
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`1 MLARS is located at Main Justice in Washington D.C. and is not part of the United
`States Attorney’s Office for the Northern District of Illinois, although of course they
`are all part of the Department of Justice. Johnston and Hankey both worked in the
`Fraud Section at Main Justice.
`2 In this opinion, “private equity interests” refer to investments in private equity
`funds, which in turn invest in various portfolio companies, and “private company
`interests” refer to direct investments in private companies.
`4
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`that Poelking identified as traceable in the spreadsheets she sent him. And the
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`prosecutors used that language in the final indictment and protective order.
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`Olinghouse and Poelking’s intent and understanding was that the language in
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`the protective order would capture only the traceable amounts “plus any increases in
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`value, in whatever form it was in.” Tr. at 1020–21; see also id. at 137 (“When I was
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`reading that, I thought it meant that . . . it would be [restraining] the $15,000, plus
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`whatever it turned into. . . . I just read it in English, and that’s what I thought it
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`meant.”).3 In practice, the effect of the “all right, title, and interest” was the restraint
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`of Gravitas or Jumpstart II’s interests in private equity entities and private
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`companies (“assets”) in their entirety. That was not a problem where the asset was
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`acquired with only traceable capital contributions. The entire asset was tainted, so
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`the protective order properly restrained “all right, title, and interest” in it. But where
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`an asset was acquired with both traceable and nontraceable capital contributions,
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`such as when part of the investment was made before the loans and capital raise,
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`only part of the asset was tainted, so the protective order should not have restrained
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`“all right, title, and interest” in it. That was issue that Shah’s new counsel raised with
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`the government in June 2023.
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`That month, the Court granted agreed motions for preliminary orders of
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`forfeiture as to Agarwal and co-defendant Brad Purdy and held a hearing on the
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`contested motion for a preliminary order of forfeiture as to Shah. See R. 480
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`3 The Court cites the transcript from the evidentiary hearing as “Tr.” The volumes of
`the transcript are found at R. 700, 701, 725, 726, 736, 737, 738, 739.
`5
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`(“Forfeiture Hr’g Tr.”).4 At the hearing, the government implicitly acknowledged that
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`certain restrained assets were not traceable to criminal proceeds. Id. at 16, 229. After
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`that hearing, Shah moved to amend the protective order to release those assets, and
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`the government, in parallel, moved for a prejudgment writ of garnishment for the
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`same assets. See R. 472, 474. In the course of that briefing, the government explicitly
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`acknowledged the excessive restraint. E.g., R. 482 at 12; R. 482-11. Then, on July 14,
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`2023, Defendants moved to dismiss the indictment, or for a new trial, based on alleged
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`violations of the Fifth and Sixth Amendments and the forfeiture laws in connection
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`with the pretrial restraint of the untainted assets. R. 490 (“motion to dismiss”).5
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`On August 8, 2023, the Court granted Shah’s motion to amend the protective
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`order to release certain restrained assets and denied the government’s motion for a
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`prejudgment writ of garnishment. See Shah Ex. 8852 (R. 500). The Court thereby
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`ordered released the assets that the government conceded were not traceable to
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`criminal proceeds. Id.; R. 506. Shah moved for the release of additional restrained
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`assets in September 2023, which the Court granted in part and denied in part. R. 524,
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`551; see also R. 550, 555. The returned assets included approximately $9.6 million in
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`4 The Court subsequently granted in part and denied in part the government’s motion
`for a preliminary order of forfeiture as to Shah. See R. 580. The preliminary order of
`forfeiture used different language than the forfeiture allegations and protective order.
`Compare R. 622 (“All right, title and interest in Leerink Transformation Partners,
`LTP BHE LP, held in the name of [Gravitas] that was acquired by or exchanged for
`$319,489 in capital contributions submitted on or about June 28, 2019, plus any
`appreciation on that right, title and interest[]”) with Indictment (“All right, title, and
`interest in [Leerink Transformation Partners LTP BHE LP], held by [Gravitas],
`including, but not limited to, $319,489 in capital contributions submitted on or about
`June 28, 2019”).
`5 Agarwal joined Shah’s motion. See R. 488.
`6
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`liquid funds from one of the private equity entities, Guild Capital. While litigating
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`these motions and others,6 the parties completed their briefing on the motion to
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`dismiss.
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`The Court heard argument on the motion to dismiss on October 27, 2023, and
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`then granted Defendants’ request for an evidentiary hearing on the Fifth and Sixth
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`Amendment claims and the timeliness of the motion. R. 624, 626, 629. The Court also
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`allowed discovery on these issues, including the issuance of subpoenas to third
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`parties. R. 629.
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`The evidentiary hearing began on January 3, 2024. During its opening
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`statement, the government asserted that of the $9.6 million it had returned to Shah
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`pursuant to the Court’s orders in August and September 2023, $8.4 million was in
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`fact traceable to criminal proceeds. Tr. at 57–60. Because that claim raised potential
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`conflicts as some of the returned funds were used to finance the defense, the Court
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`recessed the hearing. Id. at 250–52. In the months that followed, defense counsel
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`worked through the potential conflict issues and the parties reached an agreement
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`regarding a clawback of certain funds. R. 679. Defendants nonetheless contested the
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`traceability of the $8.4 million and filed a motion to preclude the government from
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`shifting its position on the traceability of those funds and exclude related evidence.
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`6 During this time, Defendants and Purdy completed the briefing on their motions for
`judgment of acquittal and for a new trial. On March 21, 2024, the Court denied the
`motions. R. 678.
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`7
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`R. 688. The Court heard argument on that motion during the reconvened hearing on
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`April 8, 2024. See Tr. at 457–80.7
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`Throughout the spring of 2024, the Court heard argument on the government’s
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`objection to the production of certain evidence as protected by the attorney-client
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`privilege, work product doctrine, and the deliberative process privilege, specifically
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`the testimony of and declarations submitted by government attorneys and certain
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`internal email communications between government attorneys and agents. The Court
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`ultimately held that only the work product doctrine applied to protect the documents,
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`but—for most of the documents, including the government attorneys’ declarations—
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`Defendants showed a substantial need sufficient to overcome the protection. R. 695,
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`707, 724, 727. Defendants requested and the Court ordered the testimony of Madden
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`and Olinghouse. Id. All of these rulings were made over the objections of the
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`government.8
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`The evidentiary hearing continued on April 8th and on May 7th, 8th, and 21st,
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`during which the following evidence was presented:
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`- Testimony from Poelking, Madden, Olinghouse, Burck, Patrick Blegen
`(Agarwal’s counsel), Koren Bell (Agarwal’s counsel), Kevin Lane (trustee of
`the Baroda Trust), and Kenneth Mathieu (Defendants’ expert);
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`- Declarations from government attorneys Madden, Olinghouse, Johnston,
`Hankey, Saurish Appleby-Bhattacharjee and government agents Poelking,
`Mark Stakem, Cory Johnsrud, and Christopher Santangelo;
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`
`
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`7 The Court decided to allow the evidence at the hearing and instead consider the
`motion to exclude as a motion to strike.
`8 Shah’s motion to compel disclosure, R. 711, is denied as moot in light of the
`government’s agreement to produce certain documents and the Court’s other rulings.
`See R. 714, 724, 727.
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`8
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`

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`- Financial records including Defendants’ bank and investment accounts and
`expenditures and declarations and related documentation from third-party
`entities subject to the protective order;
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` -
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`
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`Internal communications between government attorneys and agents before
`and after the indictment;
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` -
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` Communications between government attorneys and agents and third-
`party entities subject to the protective order;
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` -
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` Engagement documents, invoices, and email communications involving
`Hueston Hennigan, Larson LLP, Blegen & Associates, Quinn Emanuel, and
`McGuireWoods; and
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` -
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` Mathieu’s reports and select materials cited in the reports.
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`The Court also considered the declarations of Defendants, Burck, Mathieu, and Lane
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`from the 2020 motion to amend litigation and additional declarations of Agarwal and
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`Burck from the briefing on the instant motion. See Gov. Ex. 2004, 2005, 2019, 2047,
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`2015; Shah Ex. 8100; R. 103-4, 488-1, 490-1, 528-1. Neither Shah nor Agarwal
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`testified at the hearing. The evidentiary hearing concluded with closing arguments
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`on May 22, 2024.
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`Discussion
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`Defendants raise three grounds for their motion to dismiss. First, they argue
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`that the government’s pretrial restraint of untainted assets violated their Sixth
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`Amendment right to hire their counsel of choice, Quinn Emanuel and McGuireWoods,
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`based on the Supreme Court’s decision in Luis v. United States, 578 U.S. 5 (2016).
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`Second, Defendants argue that the government knowingly presented false testimony
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`to the grand jury that “all right, title, and interest” in the property described in the
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`indictment was subject to forfeiture and failed to correct that testimony (or the
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`9
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`

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`excessive restraint) in violation of the Fifth Amendment. Third, Defendants argue
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`that the pretrial restraint of nontraceable assets violates the forfeiture laws. The
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`government contests each of these arguments and also challenges the timeliness of
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`the motion. The Court addresses timeliness first.
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`I.
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`Timeliness
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`At the start, the Court must decide whether Defendants can properly bring the
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`motion to dismiss at this late stage. “A criminal defendant forfeits an argument if
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`negligently fails to assert a right in a timely fashion.” United States v. McMillian, 786
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`F.3d 630, 635–36 (7th Cir. 2015) (citations omitted). Federal Rule of Criminal
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`Procedure 12(b)(3) requires a motion “alleging a defect in instituting the prosecution”
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`or “a defect in the indictment” to be raised before trial “if the basis for the motion is
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`then reasonably available and the motion can be determined without a trial on the
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`merits.” An error in the grand jury proceeding is one of the defects in instituting the
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`prosecution contemplated by Rule 12(b)(3). Fed. R. Crim. P. 12(b)(3)(A)(v). However,
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`a court may consider an untimely motion “if the party shows good cause.” Fed. R.
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`Crim. P. 12(c)(3).
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`Defendants raise several arguments in support of dismissal: the pretrial
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`restraint of untainted property in violation of the Sixth Amendment and the
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`forfeiture laws, and the presentation of false testimony to the grand jury and the
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`failure to correct that testimony in violation of the Fifth Amendment. Certainly, the
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`argument that the government presented false testimony to the grand jury that “all
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`right, title, and interest” in the property described in the indictment was subject to
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`10
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`

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`forfeiture can fairly be characterized as “an error in the grand-jury proceeding.” Fed.
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`R. Crim. P. 12(b)(3)(A)(v). While Defendants argue that the types of indictment
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`defects contemplated by Rule 12(b)(3)(B) relate to the form of the allegations, not
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`their veracity, Defendants do not argue that such a limitation applies to Rule
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`12(b)(3)(A). Nor would such an argument change the outcome, where Rule 12(b)(3)(A)
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`expressly refers to errors in grand jury proceedings. Id.; see also United States v.
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`Whitfield, 590 F.3d 325, 358–59 (5th Cir. 2009) (affirming denial of motion to dismiss
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`that was filed after trial began in which defendant claimed government presented
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`false testimony to grand jury and presented a factually incorrect indictment). And for
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`the reasons that follow, Defendants’ arguments that this ground for dismissal was
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`not “reasonably available” to them before trial and there is “good cause” for the delay
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`fall flat. However, unlike the presentation of false testimony to the grand jury, the
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`other two bases for Defendants’ motion—that the government failed to correct grand
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`jury testimony and that untainted assets were unlawfully restrained—focus on
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`conduct arising after the indictment, and thus neither allege “a defect in instituting
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`the prosecution” or “a defect in the indictment.” Those bases are not rendered
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`untimely by the express provisions of Rule 12(b)(3).
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`That does not mean, however, that a motion on these grounds can be brought
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`at any time. Several courts have held that defendants forfeit Sixth Amendment
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`counsel of choice challenges by failing to object to the restraint of untainted funds
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`before trial. See United States v. Lindell, 766 F. App’x 525, 528 (9th Cir. 2019)
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`(defendant forfeited the Sixth Amendment challenge by failing to object to the
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`11
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`pretrial restraint of untainted funds until after trial) (citing Puckett v. United States,
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`556 U.S. 129, 134 (2009); United States v. Ripinsky, 20 F.3d 359, 365 (9th Cir. 1994));
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`United States v. Balotin, 2023 WL 2264181, at *21 (M.D. Fla. Feb. 28, 2023) (denying
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`motion for new trial where defendant “fail[ed] to show any cause for his decision to
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`wait to raise this Sixth Amendment challenge only after he was convicted at trial”).
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`Notably, Luis, the primary case on which Defendants rely, involved a pretrial
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`challenge to a restraining order. 578 U.S. at 9 (plurality opinion).
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`Indeed, criminal defendants have an avenue to lodge such a challenge at the
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`earliest stages of a case. Under longstanding Seventh Circuit case law, defendants
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`are entitled to an “immediate, postrestraint, adversary hearing at which the
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`government is required to prove the likelihood that the restrained assets are subject
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`to forfeiture.” United States v. Moya-Gomez, 860 F.2d 706, 731 (7th Cir. 1988); see
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`also United States v. Jones, 844 F.3d 636, 640–41 (7th Cir. 2016). That procedure
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`aligns with the practice of courts across the country. See Kaley v. United States, 571
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`U.S. 320, 324 (2014) (“Since Monsanto, the lower courts have generally provided a
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`hearing to any indicted defendant seeking to lift an asset restraint to pay for a lawyer.
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`In that hearing, they have uniformly allowed the defendant to litigate . . . whether
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`probable cause exists to believe that the assets in dispute are traceable or otherwise
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`sufficiently related to the crime charged in the indictment.”). And a post-indictment
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`restraining order and a district court’s order refusing to vacate it are immediately
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`appealable. See United States v. Kirschenbaum, 156 F.3d 784, 788 (7th Cir. 1998).
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`12
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`Defendants never sought a Moya-Gomez hearing as to the assets at issue in
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`this motion. Instead, they waited more than three and a half years after indictment,
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`seven months after the start of trial, and three months after conviction to raise the
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`issue of an excessive restraint with the Court. Defendants say they could not have
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`discovered the restraint was overbroad until March 2023, when the government first
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`produced Poelking’s tracing spreadsheets and email correspondence with the
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`government pursuant to the Jencks Act (18 U.S.C. § 3500) shortly before her trial
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`testimony. But within three months of the entry of the protective order, Defendants
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`and their counsel had all of the information they needed to discover the excessive
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`restraint, or at least challenge the traceability or seek greater clarity from the
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`government. By February 2020, they had received copies of the indictment, protective
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`order, grand jury testimony and exhibits, bank records, and records from the private
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`equity entities and private companies. Gov. Ex. 2115. Though those materials did not
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`include Poelking’s tracing spreadsheets, there was nothing preventing Defendants
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`from asking for more information about the government’s tracing analysis or
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`performing their own tracing analysis.
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`After all, it was their own property being restrained. Defendants were the ones
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`who made the investments in the first place, orchestrated the relevant transactions,
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`and set up and maintained the numerous corporate entities and bank accounts at
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`issue. Indeed, Defendants would have received periodic account statements in real
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`time. By that token, in the unlikely event that Defendants did not know which of
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`13
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`their assets were funded by what sources, including the loans and capital raise, they
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`certainly had the ability to figure it out.
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`Defendants say they were under the “impression” that the government had
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`traced “all right, title, and interest” in the restrained assets to not only the loans and
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`capital raise but to the pharmaceutical company fraud too.9 Tr. at 825. Burck
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`attributed that impression to the fact that the forfeiture allegation in the indictment
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`cites the wire and mail fraud counts associated with the pharmaceutical company
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`fraud, see Indictment at p. 49, and a phone call with the government in December
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`2019. Tr. at 815, 825, 892–93, 970–71. According to Burck, on the call, defense counsel
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`explained their understanding that “the allegation was the entire business was a
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`fraud,” and the government “confirmed that.” Id. at 815. He understood the
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`government to assert that anything that had come from Outcome Health could be
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`forfeited as criminal proceeds, including Defendants’ salaries. Id. at 815, 970–72. He
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`further recalled that one of the government attorneys (either Madden or Johnston)
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`said that the “indictment spoke for itself” and confirmed that the amounts listed in
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`the protective order were not meant to be limiting or exclusive. Id. at 892–93, 901,
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`970–71.
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`There are no notes from this conversation with the government. Id. at 894–95.
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`Madden testified that he did not recall a conversation with Burck or any member of
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`9 In addition to alleging that Defendants defrauded lenders and investors, the
`indictment alleged that Defendants defrauded Outcome’s pharmaceutical company
`clients through over-selling Outcome Health’s inventory and concealing pervasive
`under-deliveries.
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`14
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`the defense group about the scope of the protective order outside of the issues related
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`to the settlement money. Id. at 1256–57. He did not recall a conversation where he or
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`Johnston stated that the “indictment speaks for itself.” Id. at 1257. And he did not
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`recall a conversation where he or Johnston characterized the entirety of Outcome
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`Health as a fraud and further stated that he wouldn’t have characterized it as such
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`because it was not their theory and would not have been consistent with the evidence.
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`Id. at 1247–49. Additionally, some of the Defendants’ affidavits from the motion to
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`amend litigation around this time suggest their contemporaneous belief that the
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`forfeiture was focused on the “Company’s fundraising,” as opposed to the
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`pharmaceutical fraud. Gov. Ex. 2004, 2005.
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`But even if the Court resolves these inconsistent recollections by taking Burck
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`at his word that the defense team had the impression—based on the indictment and
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`the phone call with the government—that the government was seeking to forfeit
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`proceeds of the pharmaceutical fraud along with the investor and lender fraud, the
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`grand jury materials that Defendants received in January 2020 say otherwise. Gov.
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`Ex. 2115 Those materials make explicit that the government was seeking to forfeit
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`proceeds of the 2016 loans and the 2017 capital raise. At the grand jury, Poelking
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`testified that as part of her investigation, she “identified a few transactions that
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`resulted in large payments” to Defendants, specifically the 2016 loans and the 2017
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`capital raise. Gov. Ex. 2114 (“Grand Jury Tr.”) at 5:18–6:20. She testified that she
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`“traced” money going to Defendants from the loans and capital raise. Id. She then
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`reviewed several charts she prepared that illustrated the flow of funds from these
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`
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`15
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`

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`Case: 1:19-cr-00864 Document #: 747 Filed: 06/12/24 Page 16 of 44 PageID #:26432
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`sources. Id. at 6:21–12:25. She followed with testimony about three other charts
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`titled, “Assets Subject to Forfeiture Attributable to the Loans Obtained in 2016,”
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`“Assets Subject to Forfeiture Attributable to the Capital Raise in 2017,” and “Assets
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`Subject to Forfeiture Attributable to the Loans Obtained in 2016 and the Capital
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`Raise in 2017,” respectively. Id. at 14:13–17:25; Gov. Ex. 2113. Those charts included
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`columns for the source of the funds; the entities where the funds were transferred to;
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`the asset identified (e.g., “all right, title and interest in investments made with [the
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`entities]”); and the “amount traceable to criminal proceeds.” Gov. Ex. 2113. Poelking
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`then testified that the assets on the chart were the same as those listed in the
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`indictment. Grand Jury Tr. at 18:1–13.
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`Burck received these materials after the conversation he recalls with the
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`government. He chose not to review them. Tr. at 922–23. Had he read them, it is hard
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`to imagine he would be left with the impression that the government had traced
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`restrained assets to proceeds
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`from the
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`fraud against Outcome Health’s
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`pharmaceutical clients. Indeed, there is no mention of the pharmaceutical company
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`fraud or of Defendants’ salaries in Poelking’s grand jury testimony or the
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`accompanying charts. Defendants make much of a reference to “the fraud” in
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`testimony that followed Poelking’s testimony about her charts:
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`Q: Have you reviewed the [forfeiture] allegations in Pages 47 -- 49 to 57
`[in the indictment]?
`A: I have.
`Q: And do they truly and accurately, to the best of your knowledge, list
`items for which there is probable cause that they came from the proceeds
`of the fraud?
`A: Yes.
`
`
`
`
`16
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`

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`Case: 1:19-cr-00864 Document #: 747 Filed: 06/12/24 Page 17 of 44 PageID #:26433
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`Grand Jury Tr. at 18:15–22 (emphasis added). But viewing the testimony and charts
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`in their entirety belies an interpretation of “the fraud” as referring to something other
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`than the loans and the capital raise. Indeed, the testimony that immediately followed
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`the above expressly clarified that the “fraud” referred to the investor and lender
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`fraud:
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`Q: And just so we’re clear, the -- the April 2016 loan would be proceeds
`of – proceeds of bank fraud?
`A: Yes.
`Q: And the – and the capital raise being proceeds of wire or mail fraud?
`A: That’s correct.
`
`Id. at 18:23–19:4. Separately, when a grand juror asked her what “criminal proceeds”
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`were, Poelking answered, “In this indictment, we’re alleging that the capital raise
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`[and] the loans that they received will be criminal proceeds[.]” Id. at 13:19–25.
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`Ultimately, Defendants had every opportunity to question and explore the
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`appropriateness of the pretrial restraint based on this testimony years before they
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`finally did.
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`That Defendants waited until after the verdict to explore this issue is made
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`even more surprising by the fact that they moved to amend the protective order in
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`early 2020, approximately five weeks after the protective order was entered, and
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`argued in that motion that they needed certain funds to pay counsel. See Shah Ex.
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`8011, 8101, 8105; R. 86, 103. At no point in that motion did Defendants raise the
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`argument that they raise now: that the protective order unlawfully restrained “all
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`right, title, and interest” in assets that contained, in certain instances, portions that
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`were not traceable to criminal proceeds. Instead, they solely argued for the release of
`
`
`
`17
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`

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`Case: 1:19-cr-00864 Document #: 747 Filed: 06/12/24 Page 18 of 44 PageID #:26434
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`the $10.3 million they claimed was cleansed of its taint by the settlement agreement
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`with the company, lenders, and investors. See R. 108 at 3, 7–8. Defendants, who were
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`represented at the time by their preferred counsel and arguing about funds needed
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`to retain counsel, could have raised this additional line of attack on the protective
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`order at that time. Defendants also could have raised it after they obtained new
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`counsel, at any point in the nearly three years before trial commenced, or in the
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`middle of trial, when they claim they received the information they needed to discover
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`the issue.
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`Had either party brought the excessive restraint to this Court’s attention, this
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`Court could have taken any number of actions short of dismissing the indictment. As
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`stated, the Court could have held a Moya-Gomez hearing. The Court also could have
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`amended the protective order on the motion of either par