United States District Court, W.D. Louisiana, Shreveport Division
HORNSBY MAGISTRATE JUDGE
MAURICE HICKS, JR. UNITED STATES DISTRICT JUDGE
the Court is Defendants Michael A. Lord (“Michael
Lord”) and Randall B. Lord's (“Randall
Lord”) (collectively “Defendants”) Motion
to Withdraw their guilty pleas (Record Document 51). The
Government opposes Defendants' Motion. See
Record Document 54. For the reasons contained in the instant
Memorandum Ruling, Defendants' Motion is
AND PROCEDURAL BACKGROUND
Lord is a former chiropractor and resident of Shreveport,
Louisiana. See Record Document 1. Michael Lord is
Randall Lord's son, and he lives with his father in
Shreveport. See id. Beginning in 2013, Defendants
began operating a business in which they exchanged cash,
credit card payments, and other forms of payment for
bitcoins. See Record Document 42 at 11-13 (guilty
plea hearing testimony of Darrin Heusel, IRS Criminal
Investigations Division). The bitcoin is a decentralized form
of online currency that is maintained in an online
“wallet.” See id. Bitcoins can be
purchased from online exchangers or brokers, who often charge
a fee for making such an exchange. See Id. Bitcoins
can then be exchanged for other goods or services online and
transferred to another person's wallet. See id.
That person can then either use such bitcoins to purchase
other goods and services or convert them back to U.S. dollars
or some other traditional form of currency. See id.
operated their bitcoin business through a website called
localbitcoins.com, on which they posted advertisements for
bitcoin exchange services. See id. at 14. Persons
who engaged Defendants' services would transfer money to
Defendants by some traditional means, such as cash or wire
transfer. See id. Then, Defendants would purchase
bitcoins from Coinbase, another online bitcoin broker, and
transfer the bitcoins back to the buyer after subtracting
their commission. See Id. Though Defendants
initially used personal bank accounts for these transactions,
they eventually used accounts associated with the following:
(1) Randall Lord's former chiropractic clinic, Jewella
Chiropractic Clinic; (2) two “doing business as”
designations, Crypto Processing Solutions and Quantum Health;
and (3) two newly-formed Nevada limited liability companies,
Data Security LLC and Pelican Mining LLC. See id. at
12; see Record Document 1 at ¶ 1.
point in the spring of 2014, Coinbase contacted Defendants
regarding the volume of activity that had been occurring in
their account and its consequences. See Record
Document 42 at 15-16. Coinbase informed Defendants that
because they were acting as bitcoin exchangers they were
required to register with the Federal Crimes Enforcement
Network (“FinCEN”), a division of the Department
of the Treasury, under March 2013 guidance from FinCEN that
clarified that bitcoin exchangers were subject to
registration requirements. See id. In July 2014,
Defendants represented to Coinbase that they were registered
with FinCEN, though they were not registered with FinCEN at
that time. See id. Defendants did not register with
FinCEN until November 2014. See id. By that time,
Defendants' bitcoin business had exchanged more than $2.5
million for bitcoins for customers all around the United
States. See id. at 15-17. Defendants continued
operating the bitcoin exchange business through 2015. See
id. at 11-25.
same time, Michael Lord became involved in a drug conspiracy.
See id. at 27-40 (guilty plea testimony of Richard
Brian Upchurch, Department of Homeland Security
Investigations Division). Evidently, Randall Lord was not
involved in this separate conspiracy. See id. In May
2015, agents of the Department of Homeland Security in San
Francisco intercepted a package from China that contained
approximately one kilogram of 5F-AB-PINACA, a synthetic
cannabinoid that is a controlled substance. See id.
at 27-28. The package was addressed to 711 Seventh Street,
Springhill, Louisiana. See id. at 28. On May 18,
2015, the Department of Homeland Security conducted a
controlled delivery of the package to that address and
subsequently arrested Al Hasnat Langhari
(“Langhari”) in connection with receiving the
package. See id.
discussing this package and other matters in an interview
with Homeland Security agents, Langhari stated that he had
been a customer of Defendants' bitcoin exchange business
on localbitcoins.com, and that he had come to know and trust
Michael Lord after several exchanges. See id. at 29.
Langhari stated that he and Michael Lord had decided to start
a business for the distribution of Xanax, a commercial name
for the Schedule IV controlled substance alprazolam, and use
the “darknet” website Agora to set up this
business. See id. To start this business, they had
acquired a pill press, a binding agent to be mixed with
alprazolam, a powder containing alprazolam itself, and a
metal part called a “Xanax die.” See id.
at 29-32. Agents either intercepted these materials in the
mail or found all of these materials during a search of a
business owned by Langhari's father in southern Arkansas.
Langhari's arrest, he contacted his girlfriend, Michell
Duhé, a student at Louisiana State University in Baton
Rouge. See id. at 35-36. He convinced her and
several friends of hers to sell what was described as 10, 000
Xanax pills to attempt to raise bail money for Langhari.
See id. However, the pills were in north Louisiana,
and needed to be taken to south Louisiana to be sold. See
id. Michael Lord took the pills to south Louisiana and
delivered them to a friend of Duhé's, Zach Bajat
(“Bajat”). See Id. at 36-37. In a
subsequent interview with federal agents, Bajat was able to
identify Michael Lord out of a six-person lineup as the
person who delivered the pills to him. See id. at
37. Michael Lord later denied involvement in this drug
conspiracy when interviewed by federal agents in July 2015.
See id. at 37-38.
November 18, 2015, a federal grand jury for the Western
District of Louisiana issued a 15-count indictment against
Defendants. See Record Document 1. Count 1 of the
indictment charged Defendants with conspiracy to operate an
unlicensed money service business in violation of 18 U.S.C.
§ 371 (conspiracy) and 18 U.S.C. § 1960 (unlicensed
money transmitting businesses). See id. at 1-3.
Counts 2-14 charged Defendants with various other crimes
associated with operating their bitcoin exchange business.
See id. at 7-16. Count 15 charged Michael Lord with
being a member of a drug conspiracy in violation of 21 U.S.C.
§ 846, 841(a)(1), and (b)(1)(C). See id. at 17.
On April 19, 2016, Defendants appeared before this Court and
pleaded guilty to Count 1 of the indictment and Michael Lord
pleaded guilty to Count 15 of the indictment pursuant to a
plea agreement with the Government. See Record
Documents 31, 34, and 35. Defendants filed the instant Motion
to Withdraw their guilty pleas on February 21, 2017.
See Record Document 51. The Government opposes the
Motion, and the Motion is fully briefed. See Record
Documents 54 and 57.
Rule of Criminal Procedure 11(d)(2)(B) states that a criminal
defendant may withdraw a plea of guilty after the court
accepts the plea but before the imposition of a sentence when
“the defendant can show a fair and just reason for
requesting the withdrawal.” Thus, a defendant
“does not have an absolute right to withdraw a plea,
” and a defendant bears the burden of persuading the
Court that the reason advanced for withdrawal is “fair
and just.” United States v. Conroy, 567 F.3d
174, 177 (5th Cir. 2009); Fed. R. Crim. P. 11(d)(2)(B). A
district court has ...