United States District Court, N.D. West Virginia
MEMORANDUM OPINION AND ORDER DENYING THE
GOVERNMENT'S MOTION TO HOLD ATTORNEY PAUL HARRIS IN CIVIL
CONTEMPT [DKT. NO. 265]
M. KEELEY UNITED STATES DISTRICT JUDGE.
Government instituted this civil contempt proceeding on April
21, 2017, when it moved for an order directing attorney Paul
Harris (“Harris”) to show cause why he should not
be held in civil contempt for converting restrained assets to
pay attorney's fees (Dkt. No. 265). Since that time, the
Court has conducted three hearings on the motion, including
an evidentiary hearing (Dkt. Nos. 279; 289; 301), and has
received post-hearing briefs from the parties (Dkt. Nos. 311;
312). After considering the record and applicable law,
concluding that the Government has not met its burden to
establish that Harris should be held in contempt, the Court
DENIES the motion (Dkt. No. 265).
FINDINGS OF FACT
December 4, 2012, a grand jury sitting in the Northern
District of West Virginia returned a 23-count indictment
against the defendant, Allen G. Saoud (“Saoud”),
charging him with health care and bankruptcy fraud, among
other offenses (Dkt. No. 1). The grand jury subsequently
returned two superseding indictments (Dkt. Nos. 29; 56).
Although Saoud initially was represented by attorney Stephen
G. Jory, the Court granted Harris's motion to substitute
as counsel on January 17, 2013 (Dkt. No. 19).
25, 2013, following a ten-day jury trial, Saoud was convicted
of thirteen counts of health care fraud, one count of
aggravated identity theft, one count of concealment of a
health care matter, one count of a corrupt endeavor to
obstruct and impede the due administration of internal
revenue laws, five counts of bankruptcy fraud, and one count
of false statement to a federal agent (Dkt. No. 106). On
August 13, 2013, the Government moved for a preliminary order
of forfeiture reflecting a forfeiture money judgment of $1,
243, 118.29 against Saoud (Dkt. No. 118).
November 15, 2013, the United States Probation Office
disclosed Saoud's Presentence Investigation Report
(“PSR”) (Dkt. No. 290 at 2). Following a review
of the PSR, Harris filed nine written objections, after which
a revised PSR was filed on December 12, 2013. Id. at
2, 66-81. In an effort to calculate Saoud's net worth,
and thus his ability to pay a fine, the Probation Officer
compiled a list of Saoud's assets, including his equity
interest in more than $11.9 million of real property.
Id. at 52-56. Notably, the PSR acknowledged that the
assets “include personal assets and assets owned by ACC
Properties, LLC; Allen-Sean Subsidiaries, LLC; Titanium Real
Estate; AGS Development, LLC; and Prime Space, LLC.”
Id. at 54. Saoud did not object to the
characterization of his interest in these assets, despite the
fact that they were titled to limited liability companies
that he shared with his wife, Jennifer Saoud (“Mrs.
January 3, 2014, attorney Robert G. McCoid
(“McCoid”) noted his appearance for Saoud (Dkt.
No. 151), following which Harris moved to withdraw as counsel
of record on January 7, 2014, because he had been placed on
home confinement by the state of West Virginia and was unable
to meet with Saoud or interview witnesses (Dkt. No. 154).
That same day, Harris and McCoid moved to continue the
sentencing hearing scheduled for January 14, 2014, so that
McCoid could “effectively and adequately prepare for
sentencing, ” and also to allow Saoud “ample time
to finalize the real estate transactions necessary to satisfy
the Government's forfeiture allegations” (Dkt. No.
155). According to the motion, Saoud had “reached a
mature stage of negotiations” with regard to a sale of
properties located at 162, 164, and 170 Thompson Drive in
Bridgeport, West Virginia; a property development located at
the Mileground in Morgantown, West Virginia[, ] containing
twenty (20) nearly completed townhomes; a group of properties
located in Jane Lew, West Virginia, including eleven (11)
apartment units, four (4) townhouses, and ten (10) trailer
rental spots; and Fairmont-based properties that contains
[sic] four (4) homes located at the Fairmont Homes rental lot
and an additional lot in Deerfield with foundation already
Id. at 3-4. The Court granted the motion and
rescheduled Saoud's sentencing for March 25, 2014 (Dkt.
sentencing hearing, the Court sentenced Saoud to a total term
of 99 months of incarceration with 3 years of supervised
release to follow (Dkt. No. 170 at 1-3). It also imposed a
mandatory special assessment of $2, 200.00, a fine of $2,
630, 000.00, and a forfeiture money judgment of $1, 243,
118.29. Id. at 5-7. The Court left open the amount
of restitution for later determination. Id. at 5.
Harris noted his appearance as appellate counsel on May 30,
2014. Thereafter, on June 5, 2014, the Court amended its
judgment to include an amount of $265, 330.04 in restitution
(Dkt. No. 196 at 5).
1, 2014, the Government and Saoud, through McCoid, jointly
moved the Court “to enter an agreed order restraining
certain assets of the defendant” that could be used to
satisfy the money judgment and restitution (Dkt. No. 199 at
1-2). At that time, Saoud was “negotiating the sale of
several parcels of real estate for approximately $4.5
million” of which he anticipated receiving $2.5 million
by January 2015. Id. at 2.
These properties include[d]: commercial buildings located at
162, 164, and 170 Thompson Drive in Bridgeport, West
Virginia; a property development located at the Mileground in
Morgantown, West Virginia[, ] containing almost twenty (20)
nearly completed townhouses; a group of properties located in
Jane Lew, West Virginia, including eleven (11) apartment
units, four (4) townhouses, and ten (10) trailer rental
spots; and Fairmont-based properties that include four (4)
homes located at the Fairmont Homes rental lot and an
additional lot in Deerfield with foundation already finished.
(Dkt. No. 201 at 2-3). The Government and Saoud agreed that
these transactions should move forward so long as Saoud used
$1, 508, 448.33 of the proceeds to satisfy his obligations to
the Government and victims in this case (Dkt. No. 199 at 2).
parties requested, on July 3, 2014, the Court entered an
Agreed Order Restraining Defendant's Assets
(“Agreed Order”), which applied to
“Defendant's assets pending appeal” (Dkt. No.
201 at 1). The Agreed Order made reference to the forfeiture
money judgment and acknowledged the Court's power to
restrain substitute assets under 21 U.S.C. § 853.
Id. at 2. It specifically directed Saoud to deposit
$1, 508, 448.33 from the proposed sales in an
interest-bearing account until after the resolution of his
appeal. Id. at 3-4. In addition, the Agreed Order
stated as follows:
Seventy-five percent (75%) of the proceeds from any other
real estate transactions shall be placed in escrow up to the
anticipated amount of forfeiture of one million two hundred
forty-three thousand one hundred eighteen dollars and
twenty-nine cents ($1, 243, 118.29) in addition to three
hundred thousand dollars ($265, 330.04) for restitution, and
notice shall be provided to the Government regarding the
consummation of any such real estate transactions as well as
notice of any property sold and the amount of any proceeds
obtained from such sale(s).
Id. at 4. The properties specifically identified in
the Agreed Order were never actually sold (Dkt. No. 308 at
having been removed as counsel of record in January 2014,
Harris apparently remained involved in the proposed property
sales (Dkt. No. 307-1 at 79, 86), and also reviewed the
Agreed Order. In point of fact, Harris met with Saoud and
McCoid in February 2014 to review the Agreed Order (Dkt. Nos.
302-10; 307-1 at 80), and in May 2014, shortly before noting
his appearance as appellate counsel, reviewed a draft of the
Agreed Order and again met with McCoid (Dkt. No. 307-1 at
2014 and 2015, Mrs. Saoud facilitated the sale of the
Worthington Drive #4
512 Worthington Drive #3
104 Acres Jack Run
512 Worthington Drive #14
512 Worthington Drive #11
Worthington Drive #8
Natalie Drive (Lot 16 Rosewood Heights)
19.55 Acres Woodcrest
none of these properties (collectively, “the
Property”) was specifically restrained by the Agreed
Order (Dkt. No. 201), each was owned by AGS Development, LLC;
Prime Space, LLC; or Titanium Properties, LLC. As discussed,
the PSR listed assets of these limited liability companies as
assets in which Saoud held an interest (Dkt. No. 290), and
Mrs. Saoud testified that Saoud instructed her to sell the
properties for the purpose of paying restitution (Dkt. No.
268-3 at 28).
each of the sales in 2014 and 2015, Mrs. Saoud tendered the
net proceeds to Harris Law Offices and executed a
contemporaneous acknowledgment that the funds would “be
immediately used to pay towards outstanding legal
bills” (Dkt. No. 292-7 at 2). Mrs. Saoud subsequently
testified, during both a deposition and an evidentiary
hearing in connection with the Government's pending
motion, that the funds were meant to be applied to
Saoud's restitution (Dkt. No. 268-3; 308 at
Price (“Price”), Saoud's sister and the
accountant for his companies, also testified on two occasions
that the net proceeds at issue were to be used “to pay
the restitution and fines and penalties” (Dkt. Nos.
278-1 at 8-9; 308 at 28). In fact, on 2014 and 2015 tax
filings for the companies, Price reported significant
expenses for “Government fines and penalties, ”
not attorney fees (Dkt. Nos. 302-1 at 4, 16; 302-2 at 4, 13;
302-3 at 15; 302-4 at 11). Nonetheless, according to Harris,
he used $352, 556.00 of the net proceeds, which had been
deposited in the Harris Law Offices trust account, to pay his
attorney fees incurred during Saoud's criminal trial
(Dkt. Nos. 274 at 6; 312 at 4). The Government contends that, as a
consequence of these payments, Harris is in contempt of the
Court's forfeiture order and the Agreed Order (Dkt. No.