105 F.3d 833 (2nd Cir. 1997), 534, United States v. Ribadeneira

Docket Nº:534, Docket 96-1299.
Citation:105 F.3d 833
Party Name:UNITED STATES of America, Appellee, v. Jose RIBADENEIRA, Albio Alzate, Cambiaria C & F Casa De Cambio C.A., Defendants, Banco Popular, Filanbanco, Gregorio Ormaza, Guislain Wattel, Juan Jose Avellan, Francelana, S.A., Maria Cordero, Gustavo Vallejo Perez, Fernando Pena, Simon Coral, Secretej CIA. LTDA., Carlos Ariba and Stella Barrera, Petitioners-
Case Date:January 30, 1997
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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105 F.3d 833 (2nd Cir. 1997)

UNITED STATES of America, Appellee,

v.

Jose RIBADENEIRA, Albio Alzate, Cambiaria C & F Casa De

Cambio C.A., Defendants,

Banco Popular, Filanbanco, Gregorio Ormaza, Guislain Wattel,

Juan Jose Avellan, Francelana, S.A., Maria Cordero, Gustavo

Vallejo Perez, Fernando Pena, Simon Coral, Secretej CIA.

LTDA., Carlos Ariba and Stella Barrera, Petitioners-Appellants.

Nos. 534, Docket 96-1299.

United States Court of Appeals, Second Circuit

January 30, 1997

Argued Nov. 8, 1996.

Stuart Holtzman, New York City (Holtzman & Taikeff, of counsel), for Petitioners-Appellants.

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Sharon Cohen Levin, Assistant United States Attorney for the Southern District of New York, New York City (Mary Jo White, United States Attorney, Guy Petrillo, Assistant United States Attorney, of counsel), for Appellee.

Martin J. Auerbach, New York City, for Superintendent of the Banks of Ecuador.

Before OAKES, LEVAL and PARKER, Circuit Judges.

PER CURIAM:

Appellants-Petitioners Banco Popular, et al. ("Appellants"), appeal from the final order entered April 1, 1996, in the United States District Court for the Southern District of New York, Leonard B. Sand, Judge, dismissing their petitions to modify a Final Order of Forfeiture. Judge Sand dismissed the petitions on the ground that Appellants lacked standing to contest the Order of Forfeiture. United States v. Ribadeneira, 920 F.Supp. 553 (S.D.N.Y.1996). Appellants assert that this dismissal was error because they have a legal interest in certain funds forfeited to the United States which grants them standing under 21 U.S.C. § 853(n)(6)(B). We disagree, and therefore affirm.

I

Facts

On March 12, 1991, Jose Ribadeneira and Albio Alzate were arrested and charged with laundering approximately $30 million through Cambiaria C & F ("C & F"), an Ecuadorian banking institution and exchange house. 1 Ribadeneira and Alzate ultimately pled guilty to conspiracy and money laundering, and, pursuant to 18 U.S.C. § 982, agreed to the criminal forfeiture of certain assets, including several C & F accounts. The Final Order of Forfeiture was entered March 5, 1993, resulting in the forfeiture of approximately $2.1 million to the United States.

Appellants were businesses based in Quito, Ecuador, which occasionally converted Ecuadorian sucres into U.S. dollars by purchasing checks drawn on C & F accounts in the United States. Once the assets in those accounts were frozen by reason of the money laundering activities of Ribadeneira and Alzate, Appellants were left unable to redeem U.S. dollar checks which they had purchased. On December 8, 1995, they petitioned under 21 U.S.C. § 853(n)(2) to modify the Final Order of Forfeiture and recover their alleged interest in the seized accounts. On April 1, 1996, the district court held that Appellants, as general creditors without an identifiable legal interest in the particular assets subject to forfeiture, lacked standing to contest the Final Order of Forfeiture, and dismissed their petition. Because they are questions of law, we review de novo both a district court's determination that a party lacks standing, Fund for Animals v. Babbitt, 89 F.3d 128, 132 (2nd Cir.1996), and that court's interpretation of a statute, United States v. Ripinsky, 20 F.3d 359, 361 (9th Cir.1994).

II

Discussion

Title 21 U.S.C. § 853, sets forth the procedure by which third parties seeking to recover an alleged interest in forfeited property may obtain judicial resolution of their claim. The provision granting standing to parties seeking to modify a Final Order of Forfeiture to exclude certain properties from that Order states:

Any person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States pursuant to this section may ... petition the court for a hearing to adjudicate the validity of this alleged interest in the property. The hearing shall be held before the court alone, without a jury....

21 U.S.C. § 853(n)(2).

Section 853(n) further provides that, once a petition has been filed, the district court conducts a hearing on the issue. In addition,

If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that--

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(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or

(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section;

the court shall amend the order of forfeiture in accordance with its determination.

21 U.S.C. § 853(n)(6).

Judge Sand properly read § 853(n)(6)'s reference to "a right, title, or interest in the property" as being the same as § 853(n)(2)'s requirement of "a legal interest in property," which is necessary for standing. Because he found that Appellants did not have a § 853(n)(6) "right, title, or interest," he held that they were without a § 853(n)(2) "legal interest" and therefore lacked standing. Ribadeneira, 920 F.Supp. at 555. Appellants argue that they do have a § 853(n)(6)(B) "legal interest" as bona fide purchasers of many of the dollars in the seized C & F accounts. The government contests the appeal, asserting that the district court correctly held Appellants to be general creditors without a legal interest in the seized funds.

The language of 21 U.S.C. § 853(n)(6) is "substantially identical" to that of 18 U.S.C. § 1963(l )(6), which deals with forfeiture after conviction under RICO, and we therefore refer to cases discussing the two statutes interchangeably. 2 Schwimmer, 968 F.2d at 1579-81, held that under § 1963(l )(6)(A), general creditors lack a legal interest in forfeited property because they cannot...

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