$1.5 million seized from DBSI president to remain frozen

jsowell@idahostatesman.comJune 4, 2014 


Douglas L. Swenson

KYLE GREEN — kgreen@idahostatesman.com Buy Photo

A federal judge has denied a request from Douglas Swenson to unfreeze $1.5 million seized from the DBSI president after Swenson and three other company executives were indicted last year.

Swenson had planned to use $1 million from the seizure to pay his Seattle-based attorneys, Angelo Calfo and Patricia Eakins. Calfo had argued that the frozen money, taken from investment accounts, was legally earned by Swenson from companies unrelated to DBSI.

Chief District Judge B. Lynn Winmill found that the money was lawfully seized under an April 2013 order from federal Magistrate Candy Dale after a grand jury indicted Swenson on a money laundering count. The government alleged that money derived from DBSI was laundered through the investment accounts.

Although Swenson was acquitted of that charge in April, the jury found him guilty of 44 counts of securities fraud and 34 counts of wire fraud. Company attorney Mark Ellison and Swenson's sons Jeremy and David were convicted of 44 counts of securities fraud

Winmill concluded that Swenson does not have assets necessary to satisfy an expected restitution order when he's sentence in August and that the seized money should be available to meet that order. Federal prosecutors said they will seek at least $75 million in restitution.

The delay between a defendant's conviction and sentencing allows the court to gather information and be "fully informed" before imposing sentence, Winmill wrote in an order issued Tuesday.

"The delay should not be an opportunity for a defendant to frustrate the sentencing by disposing of assets. Returning the money to the defendant in this case would do just that," Winmill wrote. "There is no logic to such an approach."

Calfo had argued that continuing the freeze on the money denies Swenson the right to counsel of his choice. Winmill noted that the U.S. Supreme Court in a 1989 case found otherwise.

The high court affirmed its findings in Kaley vs. U.S., decided in February. In that case, the defendants were unsuccessful in arguing that seized assets should be released so they could pay their attorneys.

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