United States v. Christopher Crawford

• Court: Court of Appeals for the Sixth Circuit
• Decided: January 8, 2025
• Docket: 24-5554
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 24a0527n.06

Case No. 24-5554

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED December 18, 2024 KELLY L. STEPHENS, Clerk ) UNITED STATES OF AMERICA ) Plaintiff-Appellee, ) ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR v. ) THE WESTERN DISTRICT OF ) TENNESSEE CHRISTOPHER CRAWFORD ) UNSEALED OPINION (See Appendix) Defendant- Appellant. )

Before: SILER, CLAY, and READLER, Circuit Judges.

CHAD A. READLER, Circuit Judge. Christopher Crawford used his single-member

limited liability company (“LLC”), Crawford Capital Consulting (“CCC”), to fund his lavish

lifestyle. But he did so while owing restitution to the United States. Seeking to collect on this

debt, the United States applied for a writ of execution on real property in Florida—a home

occupied by Crawford but owned by CCC. The district court determined that CCC was Crawford’s

alter ego under Florida law and allowed the United States to levy the property. We now affirm.

I.

Eight years ago, Christopher Crawford pleaded guilty to wire fraud. The district court

sentenced Crawford to 33 months’ incarceration and ordered that he pay a little over $1.8 million

in restitution. With respect to his financial debt to the United States, Crawford paid less than

$50,000, at times contributing as little as $7 a month toward repayment. No. 24-5554, United States v. Crawford—UNSEALED OPINION

The government sought to collect on the outstanding debt. One avenue for doing so is the

Federal Debt Collection Procedures Act, which authorizes the government to levy property that a

defendant debtor, like Crawford, owns. 28 U.S.C. § 3203(a); see, e.g., United States v. Coluccio,

19 F.3d 1115, 1116 (6th Cir. 1994). Crawford’s case, however, presented a wrinkle, as the Florida

home in which he lived was titled in CCC’s name. Yet there was a potential workaround: the

federal government may seize property held by a third party if “the third party is holding the

property as a nominee or alter ego of the delinquent” as understood under applicable state property

law. Spotts v. United States, 429 F.3d 248, 251 (6th Cir. 2005) (citing G.M. Leasing Corp. v.

United States, 429 U.S. 338, 350–51 (1977)) (interpreting, under the tax code, the government’s

ability to enforce a federal tax lien on property owned by a third party to a delinquent taxpayer).

So the government applied for a writ of execution in district court to levy on the home, asserting

that CCC was Crawford’s alter ego.

To that end, the government offered evidence that Crawford, the sole member of CCC, was

using the LLC to fund his generous lifestyle. For instance, he used $683,330 from CCC’s accounts

to pay for the custom-built home he lived in rent free. From those same accounts, Crawford also

purchased a $60,000 SUV, which he titled in his name. In addition, he routinely used a bank

account belonging to CCC to pay for various personal expenses, including concert tickets. CCC

also served as a source of cash for Crawford. Between February 2021 and December 2022, he

transferred approximately $81,000 from CCC accounts to his personal checking account. He failed

to disclose any of these transactions to the government. In his sworn financial forms, he

represented himself as self-employed, listing his occupation as “Freelance Landscaping/odd jobs.”

He also reported that his gross monthly income was $4,800, denying having earned income from

any other source or business.

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On this record, the district court issued an order for a writ of execution for the Florida

property. The government served a notice to Crawford to vacate the premises. When it did, CCC

sought to intervene in the proceedings and, in turn, to quash the writ of execution and levy on the

grounds that CCC was not Crawford’s alter ego. The district court allowed CCC to intervene but

denied its request to displace the execution order. This appeal followed.

II.

We review a district court’s denial of a motion to quash a writ of execution for abuse of

discretion and its underlying legal conclusions de novo. See United States v. LaRoque, 724 F.

App’x 268, 268 (4th Cir. 2018) (per curiam); Guy v. Lexington-Fayette Urb. Cnty. Gov’t, 624 F.

App’x 922, 928 (6th Cir. 2015). A district court abuses it discretion when it “relies on clearly

erroneous findings of fact, applies the wrong legal standard, misapplies the correct legal standard

when reaching a conclusion, or makes a clear error of judgment.” Cole v. City of Memphis, 839

F.3d 530, 540 (6th Cir. 2016) (internal quotation omitted).

We agree that CCC was Crawford’s alter ego. As the home CCC owned is in Florida, the

alter ego analysis is governed by Florida law. See Spotts, 429 F.3d at 251. As a matter of business

law, we begin with the understanding that in Florida, as elsewhere, an LLC is a separate legal

entity, Fla. Stat. § 605.0108(1), and its members are typically not responsible for the LLC’s debt,

id. § 605.0304(1). That said, an LLC’s debts can be imputed to its owners when they wholly

disregard the entity’s separate form and functionally use the LLC as their alter ego. See Dania

Jai–Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1119–20 (Fla. 1984) (applying alter ego doctrine

in corporate context); 17315 Collins Ave., LLC v. Fortune Dev. Sales Corp., 34 So. 3d 166, 168

(Fla. Dist. Ct. App. 2010) (applying alter ego doctrine in LLC context); Fla. Stat. § 605.0503(7)(c)

(preserving “equitable principles of alter ego” for LLCs). In that case, a court will pierce the

3 No. 24-5554, United States v. Crawford—UNSEALED OPINION

separate-entity veil and disregard the LLC, rendering its members personally liable for company

debts. See, e.g., Dania Jai–Alai Palace, 450 So. 2d at 1119–20. This remedy is equally available

to hold the LLC liable for the member’s debts where the member used the LLC to secrete assets

and avoid personal liability. See Braswell v. Ryan Invs., Ltd., 989 So. 2d 38, 39 (Fla. Dist. Ct.

App. 2008). A claimant seeking to pierce the veil of an LLC in Florida must establish three things:

(1) the member “dominated and controlled the [LLC] to such an extent that the [LLC]’s

independent existence[] was in fact non-existent”; (2) the LLC form was “used fraudulently or for

an improper purpose”; and (3) “the fraudulent or improper use of the [LLC] form caused injury to

the claimant.” Gasparini v. Pordomingo, 972 So. 2d 1053, 1055 (Fla. Dist. Ct. App. 2008)

(citations omitted). As Crawford does not contest the third element, we focus on the first two.

A. To justify piercing the veil under Florida law, the government must first show that

Crawford “dominated and controlled” CCC so much so that the LLC did not have an independent

existence. Id. The record is replete with evidence of Crawford doing so by treating CCC’s

financial accounts as his own personal funds. For instance, Crawford used the LLC to purchase a

$683,330 home. On top of that, CCC funded the installation of a $83,000 swimming pool at the

residence. CCC also provided for Crawford’s luxury SUV. What is more, Crawford transferred

$81,000 from CCC into his personal account. And recall that Crawford used CCC funds to pay

for an array of other personal expenses. In fact, CCC seemingly served no real business purpose

other than to support Crawford’s lifestyle. See State ex rel. Cont’l Distilling Sales Co. v. Vocelle,

27 So. 2d 728, 729 (Fla. 1946) (explaining the corporate “purpose is generally to limit liability and

serve a business convenience” (emphasis added)). This extensive use of LLC funds to pay for

personal expenses and the commingling of CCC’s funds with Crawford’s own personal accounts

demonstrate that he dominated and controlled CCC as his alter ego. See Advertects, Inc. v. Sawyer

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Indus., 84 So. 2d 21, 24 (Fla. 1955) (explaining that the veil can be pierced if “in some fashion . .

. the corporate property was converted or the corporate assets depleted for the personal benefit of

the individual stockholders”).

Crawford responds that a commingling of personal and company funds alone is insufficient

to satisfy the first factor of Florida’s “pierce the veil” test. Perhaps so. But that is largely beside

the point. The significant commingling here was coupled with CCC’s lack of a legitimate business

purpose, facts that together amply support the district court’s finding that Crawford dominated and

controlled CCC. On this front, consider Eckhardt v. United States, 463 F. App'x 852 (11th Cir.

2012) (per curiam), where the Eleventh Circuit held that the defendant was the alter ego of a

corporation in which he was the sole shareholder. Id. at 853. Citing Florida law, the appeals court

recognized that an “important factor relevant to whether an individual dominates the corporation

to such an extent as to negate its separate identity is whether corporate funds were used for the

individual’s benefit.” Id. at 856 (citing Dania Jai-Alai Palace, 450 So. 2d at 1120). Eckhardt then

applied this principle to a record with “overwhelming evidence of commingled funds between”

the sole shareholder and his corporation. Id. The defendant there wrote himself checks from the

corporate account and used corporate funds to help pay for a personal vehicle as well as a portion

of his mortgage. Id. That evidence confirmed “that [the owner] dominated and controlled [the

corporation] as its alter ego.” Id. at 857. Crawford’s conduct, by comparison, was nearly identical

(if not more egregious). Recall that he used CCC to pay for the home he lived in, his car, and a

litany of other personal expenses. That fairly suffices to affirm the district court’s determination

on the first prong.

B. The remaining element of the veil-piercing test is satisfied if “the [LLC] form [has]

been used fraudulently or for an improper purpose.” Gasparini, 972 So. 2d at 1055 (citations

5 No. 24-5554, United States v. Crawford—UNSEALED OPINION

omitted). This situation arises when a limited liability entity is used as “a mere device or sham to

accomplish some ulterior purpose, or is a mere instrumentality or agent of another corporation or

individual owning all or most of its stock, or where the purpose is to evade some statute or to

accomplish some fraud or illegal purpose.” Aztec Motel, Inc. v. State ex rel. Faircloth, 251 So. 2d

849, 852 (Fla. 1971) (citation omitted).

By any measure, Crawford improperly used CCC to avoid paying his restitution judgment.

In his sworn financial paperwork, he failed to disclose the existence of CCC, to say nothing of the

income he derived from the LLC. Instead, Crawford represented to the government that he was a

self-employed “freelance landscaper” making $4,800 a month, deriving no other income. In truth,

Crawford transferred more than $81,000 of company funds into his personal accounts. On top of

that, he utilized company funds to purchase a custom home, buy a luxury car, and cover personal

expenses. In total, Crawford spent over $900,000 of CCC’s funds on personal expenses while

owing nearly double that amount in restitution. His failure to disclose combined with his immense

spending supports the district court’s finding that Crawford improperly used CCC to hide assets

and avoid restitution. See Lipsig v. Ramlawi, 760 So. 2d 170, 187 (Fla. Dist. Ct. App. 2000) (listing

“to hide assets” as an “unlawful or improper use” of a corporation).

Crawford advances five arguments to the contrary. First, he asserts that because CCC was

established prior to his criminal conviction, the LLC could not have been organized for an

improper purpose. But proper organization at the start does not preclude a finding of later misuse.

See, e.g., W.P. Prods., Inc. v. Tramontina U.S.A., Inc., 101 F.4th 787, 792–93 (11th Cir. 2024) (per

curiam) (allowing veil-piercing under Florida law where a corporation was organized for a proper

purpose but later used improperly to avoid paying creditors). In the Sunshine State, it suffices that

6 No. 24-5554, United States v. Crawford—UNSEALED OPINION

the LLC form has “been used fraudulently or for an improper purpose.” Gasparini, 972 So. 2d at

1055 (emphasis added) (citations omitted).

Second, Crawford believes it is commonplace for business executives to live in company

owned homes and drive company owned vehicles. True, a business owner’s use of company

owned items may not always be improper. Yet the facts here reveal far more. Start with the car.

Crawford did not drive a company owned vehicle—rather, he used CCC funds to purchase the

vehicle titled in his own name. Now the home. Crawford admits he used the LLC to purchase the

home because, as a felon with bad credit and little wealth, he was unable to do so alone. And

Crawford never paid rent on the home. These facts belie his assertion that he was merely living in

company owned housing, or, relatedly, that the purchase of the home was an investment for the

LLC’s benefit. Cf. Advertects, 84 So. 2d at 24 (declining to pierce the corporate veil when there

was “no showing at all that the stockholders had improperly converted any of [the corporate

entity’s] property to their own use”).

Third, Crawford emphasizes that he did not transfer his own personal assets to CCC to

purchase the home. Rather, CCC paid for the home with cryptocurrency it owned prior to

Crawford’s conviction. While transferring personal assets to an LLC is one way to improperly use

an LLC, it is not the only way. Take, for example, the fact that Crawford failed to disclose the

existence of CCC (or any income from it) on his sworn financial forms to the government. Those

actions support the district court’s finding that Crawford used CCC to hide funds to avoid payment

of his restitution. See Aztec Motel, 251 So. 2d at 852 (explaining that improper use occurs when

the business is used to evade some legal requirement or accomplish fraud).

Fourth, Crawford argues that because he “paid [restitution] faithfully” he was not using

CCC to shield his assets. Those payments had dwindled to just dollars a month, which tests the

7 No. 24-5554, United States v. Crawford—UNSEALED OPINION

meaning of “faithful.” In any event, there is no authority suggesting that some repayment of

restitution allows the defendant to shield his assets from additional repayment.

Finally, Crawford argues Florida’s homestead exception proves that he never intended to

shield assets from the government. The Florida Constitution “protects the homestead from forced

sale by creditors,” Snyder v. Davis, 699 So. 2d 999, 1001 (Fla. 1997), when it is owned by a

“natural person,” Fla. Const. art. X, § 4(a)(1). According to Crawford, if he wanted to shield assets

from the government, he would have purchased the home himself, thereby immunizing it from

seizure. But as Crawford acknowledges, this expectation would not have spared his home. Rather,

under the Mandatory Victims Restitution Act, the government would still have been able to seize

the property to satisfy the restitution judgment. See 18 U.S.C. § 3613(a)(1) (exempting seizure for

only a series of federal exemptions). Equally true, simply because Crawford could have devised

an improved means for concealment does not mean that the one he chose was not an attempt to

hide assets from the government.

In sum, we agree that Crawford improperly used CCC to avoid restitution. And with all

prongs of the veil-piercing test satisfied, we likewise agree that CCC was Crawford’s alter ego.

Therefore, the district court did not abuse its discretion in denying CCC’s motion to quash the

government’s writ of execution.

* * * * *

We affirm the judgment of the district court.

8 No. 24-5554, United States v. Crawford—UNSEALED OPINION

APPENDIX

On December 18, 2024, the court filed this opinion under seal, and granted counsel ten (10)

days to move for redaction of sensitive information, if any, contained in the opinion. On January

8, 2025, the court, having received no motion for redactions, unsealed the opinion. The date the

opinion is deemed to have been filed remains December 18, 2024.