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United States v. Musgrave

United States District Court, S.D. Ohio, Western Division, Dayton

January 9, 2018





         This criminal case is before the Court on Objections by the United States (ECF No. 283) to the Report and Recommendations on Restitution (“Report, ” ECF No. 282). District Judge Black has recommitted the matter for reconsideration under Fed. R. Crim. P. 59(b)(2). Defendant Paul David Musgrave and Intervenor Barbara Musgrave have responded to those Objections (ECF Nos. 286, 287), making the Objections ripe for consideration.

         The Sixth Circuit remanded this case with an order that this Court “hold an evidentiary hearing to determine which assets the United States can reach to enforce the order of restitution.” United States v. Musgrave, Case No. 15-3388, 664 Fed.Appx. 540 (6th Cir. Nov. 30, 2016)(unpublished; copy at ECF No. 238). The Sixth Circuit also set out the legal standard to be applied to the question on remand. Id. at 542-43, principally relying on Drye v. United States, 528 U.S. 49 (1999), and United States v. Craft, 535 U.S. 274 (2002).

         The remanded question was referred to the undersigned to conduct the required evidentiary hearing and file a report and recommendations with proposed findings of fact and conclusions of law (Order of Referral, ECF No. 240, PageID 4487). Although the Order of Referral mentions only Fed. R. Crim. P. 59, 18 U.S.C. § 3664(d)(6) expressly authorizes reference to a Magistrate Judge “for proposed findings of fact and recommendations as to disposition, subject to a de novo determination of the issue by the court.”

         Proposed Findings of Fact

         After evidence was presented, the Magistrate Judge ordered that the exhibits be filed and that each party also file “proposed findings of fact and conclusions of law in the form required by Fed.R.Civ.P. 52 and Fed. R. Crim. P. 59(b)(1) . . . . Proposed findings of fact shall reference with PageID numbers the place or places in the record that support the proposed finding” (Order for Post-Hearing Briefing, ECF No. 251, PageID 4532).

         The Government's Post-Hearing Brief (ECF No. 276) and its Reply Brief fail utterly to comply; there is not a single PageID reference anywhere in either one of them. The Government's opening Brief contains sixty-three proposed findings of fact in numbered paragraphs, none of which has a PageID reference (ECF No. 276, PageID 6344-51).

         In preparing the Report, the Magistrate Judge offered proposed findings of fact in narrative form rather than in numbered paragraphs (Report, ECF No. 282, PageID 6411-19). This manner of complying with Fed.R.Civ.P. 52 is a common practice in this Court. See, e.g., In re: Ohio Execution Protocol Litigation (McGuire), 994 F.Supp.2d 906 (S.D. Ohio Jan. 13, 2014); In re: Ohio Execution Protocol Litigation (Lorraine), 840 F.Supp.2d 1044 (S.D. Ohio Dec. 23, 2013). Because the parties proffered proposed findings of fact which the Magistrate Judge ultimately found not material, the proposed findings of fact in the Report are prefaced with this language:

In constructing this set of factual findings, the Magistrate Judge has included every finding proposed by any of the parties which is appropriately supported by evidence without attempting to decide its relevance or materiality; those questions are reserved for the analysis section below.

(Report, ECF No. 282, PageID 6411.)

         In its Objections, the Government criticizes the Report for not having adopted its proposed findings of fact numbered 18, 19, 25, 27, 28, 31, 32, 33, 45, 52, 53, 59, and 62 (Objections, ECF No. 283, PageID 6432-34). The following table sets forth the Government's proposed findings assertedly omitted from the Report and the treatment of that proposed finding in the Report.

Government Proposed Finding

Related proposed finding in the Report

No. 18 In conjunction with opening said accounts, Mrs. Musgrave executed a limited power of attorney form, authorizing the defendant to serve as her “attorney-in-fact” on each of the three said TD Ameritrade accounts.

On May 26, 2011, Barbara Musgrave gave David a limited power of attorney for her three TD Ameritrade accounts. (Report, ECF No. 282, PageID 6415.)

No. 19 This limited power of attorney specifically authorized the defendant to act as her attorney-in-fact, to wit: to act as her agent “to buy, sell, and trade stocks, bonds, and any other securities and/or contracts relating to the same on margin or otherwise in accordance with your terms and conditions for (Mrs. Musgraves's) account . . . . In all such purchases, sales or trades (TD Ameritrade) [is] authorized to follow the instructions of my Agent in every respect concerning my account with you; and my Agent is authorized to act for

David Musgrave's authority under this POA is limited to the purchase and sale of securities as Barbara Musgrave's agent; he has no authority to make any transfers to himself or otherwise engage in self-dealing. Barbara Musgrave did not execute the section of this form POA permitting David Musgrave to receive a fee from the account and no evidence was presented at the hearing that he had ever withdrawn any funds from any of these accounts or had any portion of them transferred to himself. (Report, ECF No. 282, PageID

me and on my behalf in the same manner and with the same force and effect as I might or could do with respect to such purchases, sales or trade . . . .”


No. 25 The defendant has continually enjoyed the right to exclude third parties from said premises.

Nothing in the cited testimony supports this proposed finding of fact except for the conclusory opinion of Susan Sigler that Mr. Musgrave had then apparent right to exclude others from the residential property. (Tr. ECF No. 264, PageID 6216.) That is a subject on which she was not competent to testify. There was no testimony that Mr. Musgrave ever actually excluded anyone.

No. 27 The defendant has never entered into had any rental agreement with his spouse nor paid her rent in order to continue to occupy this residence.

While Mr. Musgrave admitted on cross-examination that he does not pay his wife rent to live in their marital home (Tr., ECF No. 263, PageID 5869-70), this fact is immaterial.

No. 28 The residence's natural gas utility account has always remained in the defendant's name.

This proposed finding is supported the evidence and is hereby adopted.

No. 31 On or about November 16, 2016, the couple jointly purchased a homeowner's insurance policy from Auto-Owners Insurance Co. for said residence.

This proposed finding is supported the evidence and is hereby adopted.

No. 32 The defendant has routinely paid his wife $2, 600 a month from his Wright-Patt Credit Union (WPCU) personal checking account to help defray monthly residential maintenance expenses.

After paying his credit card and monthly restitution amounts, David Musgrave contributes approximately $2, 600 per month toward the $13, 000 total. The money is paid by check drawn on David Musgrave's Wright-Patt Credit Union account and deposited into Barbara Musgrave's Charlotte Metro Credit Union account. After deduction of the amounts paid separately by David Musgrave (monthly restitution and credit card payment) and the amounts paid separately by Barbara Musgrave (mortgage, real estate taxes, property insurance, homeowner's association fee, car loan, and legal fees), the Musgrave's consolidated monthly expenses total approximately $5, 200. (Report, ECF No. 282, PageID 6417.)

No. 33 This $2, 600 monthly payment is deposited into Mrs. Musgrave's Charlotte Metro Credit Union (CMCU) checking account from which she pays the residence's monthly household bills along with the $1, 913.79


monthly mortgage payment to Wells Fargo Bank.

No. 34 On or about January 13, 2010, Mrs. Musgrave purchased and titled in her name a 2008 Harley Davidson Model FLTR motorcycle.

On January 13, 2010, Barbara Musgrave purchased and titled in her name a 2008 Harley Davidson Model FLTR motorcycle. (Report, ECF No. 282, PageID 6417.)

No. 45 The couple jointly hold a motor vehicle insurance policy on said vehicle from Auto-Owners Insurance Co.

The evidence supports a finding that both Paul and Barbara Musgrave are listed as insureds on this policy (Tr. ECF No. 263, PageID 5879). Mr. Musgrave was unsure whether he contributed to the premiums or not. Id.

No. 52 As of May 2017, the defendant is eligible to draw $1, 140.70 in monthly social security retirement benefits. The defendant testified he has no present intention of filing for these benefits prior to turning 70 years of age.

As of May 2017, David Musgrave is eligible to draw $1, 140.70 in Social Security retirement benefits, but testified he does not intend to apply for such benefits until reaching seventy years of age. (Report, ECF No. 282, PageID 6418.)

No. 53 The defendant further testified he is unwilling to contribute anything more than the minimum required amount of said benefits toward restitution.

Defendant testified that he was willing to have any Social Security benefits he may receive included in the calculation of his income, but not to contribute more of them toward restitution than required by law because “I have to live.” (Tr. ECF No. 264, PageID 5910.)

No. 59 Mrs. Musgrave's present version of her Last Will and Testament provides in a trust provision, that her estate assets will be made available to the defendant following her death.

“On April 17, 2017, Barbara Musgrave changed the listed beneficiary on her life insurance policy from David Musgrave to her three adult children. Soon thereafter David and Barbara Musgrave executed new wills with accompanying irrevocable trusts. Barbara Musgrave's will lists her three adult children as primary beneficiaries of her estate.” (Report, ECF No. 282, PageID 6418.) Susan Sigler testified that it was her understanding of the estate documents that, after Mrs. Musgrave's death, Defendant would have her assets available to him as well as any income those assets generated. (Tr., ECF No. 264, PageID 6121.)

No. 62 Between 2013 and 2017, the defendant significantly reduced his pro rata portion of secured liabilities associated with his closely held businesses GMD Industries and M&M Investments by in excess of $406, 000.

This finding is supported by Ms. Sigler's testimony and is hereby adopted. (See Tr., ECF No. 264, PageID 6214.)

         Proposed ...

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