393 F.3d 348 (2nd Cir. 2004), 03-6164, Pacheco v. Serendensky

Docket Nº:03-6164.
Citation:393 F.3d 348
Party Name:Barbara PACHECO, Appellant, United States of America, Plaintiff-Appellee, v. John SERENDENSKY, a/k/a John Vitolano, Joseph Foti & Guy Foti, Defendants.
Case Date:December 29, 2004
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 348

393 F.3d 348 (2nd Cir. 2004)

Barbara PACHECO, Appellant,

United States of America, Plaintiff-Appellee,

v.

John SERENDENSKY, a/k/a John Vitolano, Joseph Foti & Guy Foti, Defendants.

No. 03-6164.

United States Court of Appeals, Second Circuit

December 29, 2004

Argued Aug. 24, 2004.

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Evan Wiederkehr, White Plains, N.Y. (DelBello Donnellan Weingarten Tartaglia Wise & Wiederkehr, White Plains, NY, of counsel), for Appellant.

Daniel S. Ruzumna, Assistant United States Attorney, Southern District of New York, New York City (David N. Kelley, United States Attorney, Gary Stein, Assistant United States Attorney, Southern District of New York, New York City, of counsel), for Appellee.

Before: MESKILL, MINER, and KATZMANN, Circuit Judges.

MESKILL, Circuit Judge.

This appeal requires us to determine the extent of the government's interest in real property forfeited to it by a criminal defendant. In particular, our question is whether, with respect to real property, the use of the term "property" in the criminal forfeiture statute, 21 U.S.C. § 853, refers to a parcel of land or to the defendant's interest in that land, where the two are not the same. Because we conclude that a criminal defendant can only be made to forfeit what was his in the first place, we adopt the latter interpretation.

BACKGROUND

John Serendensky, the defendant in the underlying criminal action, was indicted on October 5, 2000 on charges of conspiracy to commit bank fraud and conspiracy to launder money stemming from activity alleged to have occurred between 1997 and October 2000. The indictment also contained forfeiture counts alleging that several properties were subject to forfeiture, including Serendensky's interest in a house located at 228 Revere Avenue, Bronx, New York.

This appeal concerns the property located at 228 Revere Avenue (the "Premises"). In short, the Premises--having been purchased jointly by Serendensky and his

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wife, Maria Caporale--are now subject to two claims of ownership. The government acquired an interest in the Premises by virtue of Serendensky's criminal activity, which made it subject to forfeiture. Meanwhile, Barbara Pacheco, the appellant, allegedly acquired an interest when she purchased the Premises at a foreclosure sale. Because the time-line of events is critical in determining whose interests in the Premises are valid and to what extent, we set forth the facts as alleged in somewhat greater detail below.

On November 10, 1998, Serendensky and Caporale purchased the Premises as joint tenants after acquiring a $115,000 mortgage from Parmann Mortgage Associates, LLP. The deed of conveyance was recorded with the Office of the City Register of the City of New York, Bronx County, on March 4, 1999. The Parmann mortgage was recorded with the City Register on the same day.

A year and a half later, on August 31, 2000, Serendensky and Caporale refinanced their mortgage with a $168,000 loan from Wilmington National Finance, Inc. The Wilmington mortgage was recorded on November 30, 2000, and afforded Wilmington a first-priority lien against the Premises; we presume that the Parmann mortgage was released as part of the refinancing.

Meanwhile, on October 5, 2000--between the time when Serendensky and Caporale refinanced their mortgage and the time the Wilmington mortgage was actually recorded--the government filed an indictment charging Serendensky with conspiracy to commit bank fraud, in violation of 18 U.S.C. § 371, and conspiracy to launder money, in violation of 18 U.S.C. § 1956(h). Each count of the indictment also had a corresponding forfeiture count alleging the forfeiture of "[a]ny right, title, and interest held by JOHN SERENDENSKY, a/k/a 'John Vitolano,' in the real property and appurtenances known as 228 Revere Avenue, Bronx, New York." The indictment alleged that Serendensky had acquired the Premises with the proceeds of his criminal activity.

On October 25, 2000--still before the Wilmington mortgage was recorded--the government filed a notice of pendency with the City Register. Mirroring the forfeiture counts of the indictment, the notice of pendency explained that the government was seeking forfeiture of Serendensky's interest in the Premises. The text of the notice of pendency is set out in the margin. 1

Subsequently, on July 19, 2001, the government filed a seven-count superseding information against Serendensky alone charging him with conspiracy to commit bank fraud, see 18 U.S.C. § 371, bank fraud, see id. § 1344, conspiracy to launder money, see id. § 1956(h), conspiracy to

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commit mail fraud, see id. § 371, conspiracy to commit robbery in interstate commerce, see id. § 1951(a), conspiracy to traffic in counterfeit access devices, see id. § 1029(b) (2), and conspiracy to distribute cocaine base, see 21 U.S.C. § 846. Like the indictment, the information contained counts corresponding to the bank fraud and money laundering charges alleging forfeiture of Serendensky's interest in the Premises, pursuant to 18 U.S.C.§ 982. The information also alleged the forfeiture of additional property--including a car, $65,000 in men's jewelry, and approximately $2,000,000 in cash--not at issue here. On July 19, 2001, the same day that the information was filed, Serendensky pleaded guilty and consented to the forfeitures alleged in the information.

During the time that Serendensky was under indictment and negotiating his plea, he and Caporale defaulted on their mortgage and Wilmington initiated foreclosure proceedings. Wilmington foreclosed notwithstanding the government's notice of pendency and three other notices published in The New York Times in April and May 2002.

On May 20, 2002, Plaza Homes, LLC, received a referee's deed in foreclosure for the Premises from Jeffrey D. Klein, Esq.; Plaza Homes, in turn, sold the Premises to Pacheco on the same day for $225,000. Pacheco's deed was recorded with the City Register on June 27, 2002. At the time that she closed on the Premises, Pacheco was aware of the notice of pendency and the ongoing forfeiture proceedings; she proceeded with the purchase anyway.

On October 8, 2002, in an attempt to clear her title, Pacheco filed a third-party petition in the forfeiture court claiming an interest in the Premises. The government promptly moved to dismiss, arguing that the foreclosure sale from which Pacheco's title originated was invalid and that, in any case, Pacheco was not a bona fide purchaser of the Premises because she was on notice of the government's interest. In an opinion and order dated July 9, 2003, the court below, Koeltl, J., agreed with the government on both counts and dismissed the petition, holding that Pacheco lacked standing because she had no valid interest in...

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