It seems almost certain that the original indictment of Mike Miske, along with the three superseding indictments that expanded both the charges and the list of co-defendants, will soon be “vacated” or set-aside due to his death prior to sentencing and appeal, along with the government’s seizure an estimated $25 million or more of Miske’s personal and business property and assets.

Miske’s defense counsel filed a motion just a week after his death in December, and prosecutors have agreed that the law requires that the indictment’s disappear. Vacating the indictments as to Miske will not affect the convictions of nearly 20 co-defendants and associates who pleaded guilty prior to trial.

So what happens to Miske’s Portlock mansion valued for tax purposes at $7.5 million, along with a Kailua home, $4.3 million in cash and cashier’s checks, collectible cars (including a 2017 Ferrari F12 Berlinetta), art work, and other assets?

Contrary to conspiracy theories floating around, all this property will not automatically be returned to his family when the indictments, and his convictions, are voided.

The case moves to civil court

Following Miske’s death, government attorneys filed a civil forfeiture complaint in Honoulu’s Federal District Court. The lawsuit names the properties themselves as defendants in the case. The government will take the assets if it can be proved they were used to commit crimes, or were obtained using proceeds “traceable to a violation of any offense constituting…unlawful activity” specified by law.

The offenses include racketeering activity which, according to the government’s lawsuit, encompasses wire fraud, fraud in connection with identification documents, financial institution fraud, and any conspiracy to commit such offenses, as well as any property involved in or traceable to money laundering or a money laundering conspiracy.

Miske’s heirs, or others who can show legal interests in any of his property, would be able to retain some or all it if the government fails to prove it was linked to Miske’s crimes.

Miske was found guilty beyond a reasonable doubt by a federal jury on 13 of 17 counts following a 6-month trial that included testimony nearly 300 witnesses.

But a civil trial over the government’s claim to Miske’s assets would be much more focused and limited in scope. And more importantly, the government does not have to prove their case “beyond a reasonable doubt.”

A lower burden of proof

Honolulu attorney Megan Kau, in a recent video interview with Nicholas Lindblad of A-1 Bail Bonds posted to YouTube, explained the government would have a lower burden of proof in a civil forfeiture.

“In the civil forfeiture action, the burden of proof for the government is much less,” Kau said. Instead of having to prove each element beyond a reasonable doubt, as in a criminal trial, the standard in a civil trial is “preponderance of the evidence.”

“Is it more likely than not that these assets were tied to illegal activities? That’s all they (the government) has to prove,” Kau said.

In addition, rather than having to prove the elements of more than a dozen charges, the government’s civil forfeiture lawsuit focuses on multiple examples of business fraud that can be proven largely by official records.

Fraud takes center stage

The government alleges, and proved during the criminal trial to the satisfaction of the jury, that Miske’s flagship company, Kamaaina Termite and Pest Control, operated within the highly regulated pest control industry through a long-running fraud that utilized fabricated corporate documents and false statements to qualify for a license to operate.

Similar fraud was involved in maintaining the licensed status of Kamaaina Plumbing, Makana Pacific (a general contractor), and other businesses.

The forfeiture complaint summarizes the issues:

From a period beginning by at least October 20, 2000, and continuing through at least July 15, 2020, Miske and others, known and unknown, engaged in a scheme to defraud individuals and entities in Hawaii in connection with the operation of the Miske Companies. The scheme involved the use of forged signatures, stolen identities, and false or fraudulent representations concerning the qualifications of proposed RMEs [Responsible Managing Employee] to obtain and maintain required licenses from the State of Hawaii Department of Commerce and Consumer Affairs (“DCCA”), and the use of those licenses to fraudulently market the Miske Companies to individuals and entities as authorized and qualified to provide pest control, construction, and other services….The operations of the Miske Companies were permeated with fraud from inception, and these companies would have been unable to conduct their operations but for the wire fraud scheme.

Focusing on this long-running fraud, the government will avoid its reliance during the criminal trial on the testimony of witnesses who were cooperating with the government as part of their plea agreement, which made them vulnerable to the suggestion by defense attorneys that they were lying in hopes of getting shorter sentences.

But despite the focus on fraud, and the lower standard of proof (“more likely than not” as opposed to “beyond a reasonable doubt), winning the case can’t be considered a slam dunk.

Landmark forfeiture case ended with compromise

One of the key cases relied on to support vacating of Miske’s indictment and conviction was the prosecution of Kenneth Lay, the founder and CEO of Enron, a Texas-based energy business, which went bankrupt in 2001 in the midst of an accounting scandal. Lay was convicted on 10 charges, including securities fraud and wire fraud, but like Miske, died before he was sentenced.

After Lay’s indictment and conviction were set aside, the government brought a civil forfeiture action in federal court aimed an seizing some $13 million in assets, including a $2.5 million 33rd floor condominium in Houston, more than $10 million in property held by a investment partnership, and $22,680 in cash.

That case dragged on for more than six years before a negotiated compromise settlement was reached. Lay’s wife, who fought the forfeiture, agreed to forfeit $2.7 million to settle the case, but retained Lay’s other assets.