971 F.2d 896 (2nd Cir. 1992), 1383, United States v. All Assets of Statewide Auto Parts, Inc.

Docket Nº:1383, Docket 92-6015.
Citation:971 F.2d 896
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. ALL ASSETS OF STATEWIDE AUTO PARTS, INC. and Proceeds Traceable Thereto; Real Property and Premises Known as 1256 Grand Street, Brooklyn, New York; All Assets of Citywide Auto Parts, Inc. and Proceeds Traceable Thereto; Real Property and Premises Known as 651 Fountain Avenue, Brooklyn, New York; All
Case Date:August 03, 1992
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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971 F.2d 896 (2nd Cir. 1992)

UNITED STATES of America, Plaintiff-Appellee,



Traceable Thereto; Real Property and Premises Known as 1256

Grand Street, Brooklyn, New York; All Assets of Citywide

Auto Parts, Inc. and Proceeds Traceable Thereto; Real

Property and Premises Known as 651 Fountain Avenue,

Brooklyn, New York; All Assets of Empire State Auto

Wreckers, Inc. and Proceeds Traceable Thereto; Real

Property and Premises Known as 1489 Montauk Highway,

Bellport, New York; All Assets of Best Auto School, Inc.

and Proceeds Traceable Thereto; Real Property and Premises

Known as 492 East 98th Street, Brooklyn, New York; Real

Property and Premises Known as 29 Puritan Lane, Farmingdale,

New York; Real Property and Premises Known as 8 Townsend

Lane, Hicksville, New York; and Real Property and Premises

Known as 19 Annandale Drive, Commack, New York, Defendants,

James D. Muro; Richard Lieberman, President of Best Auto

School, Inc.; Salvatore Cioffi, President of Empire State

Auto Wreckers, Inc.; Anthony Francaviglia; Josephine

Francaviglia; Frank Frigenti, Jr.; Ronald A. Caputo; Mary

Ann Caputo; Frank Morsello; Margaret Morsello; John

Carneglia; Jenny Carneglia; Charles Carneglia; Harvey

Melvin Crosby and Anthony Grau, Claimants,

James D. Muro, Claimant-Appellant.

No. 1383, Docket 92-6015.

United States Court of Appeals, Second Circuit

August 3, 1992

Argued April 15, 1992.

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[Copyrighted Material Omitted]

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Perry S. Reich, Lindenhurst, N.Y. (Schapiro & Reich, Mahler & Harris, P.C., Kew Gardens, N.Y., of counsel), for claimant-appellant.

Richard K. Hayes, Asst. U.S. Atty., E.D.N.Y., Brooklyn, N.Y. (Andrew J. Maloney, U.S. Atty., E.D.N.Y., Robert L. Begleiter, Deborah B. Zwany, James M. Catterson, Paul Weinstein, Asst. U.S. Attys., of counsel), for plaintiff-appellee.

Before: TIMBERS, VAN GRAAFEILAND and PRATT, Circuit Judges.

GEORGE C. PRATT, Circuit Judge:

James D. Muro (Muro), the president of Statewide Auto Parts, Inc. (Statewide), appeals from a December 16, 1991, order of the United States District Court for the Eastern District of New York, Eugene H. Nickerson, Judge, which denied his motions (1) to dismiss the government's verified forfeiture complaint in rem, and (2) to vacate the government's seizure of his company's assets. For the following reasons, we affirm the order of the district court.


On November 15, 1991, the United States filed a verified in rem complaint seeking the forfeiture of various real and personal properties which, the government alleged, had been used to operate an extensive stolen car enterprise. This civil forfeiture action was commenced under 18 U.S.C.

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§ 981(a)(1)(A), which provides, in pertinent part:

[T]he following property is subject to forfeiture to the United States:

(A) Any property, real or personal, involved in a transaction or attempted transaction in violation of section 5313(a) or 5324 of title 31, or of section 1956 or 1957 of this title, or any property traceable to such property.

The government alleged that the in rem defendants--"all assets" of four named corporations, including Statewide, plus seven identified parcels of real property--had been used to commit, and facilitate the commission of, violations of various subsections of 18 U.S.C. § 1956, the federal money-laundering statute, violations which emanated from trafficking in stolen automobiles bearing illegally-altered vehicle identification numbers, and from related mail fraud and bribery offenses.

Simultaneously with filing the complaint, the government applied for a warrant to seize the in rem defendants. This application, which was submitted to Judge Nickerson ex parte, was accompanied by a 93-page, 337-paragraph declaration from Nassau County police detective Thomas Keteltas, who purported to detail the claimants' scheme of "laundering" stolen automobiles by passing off late-model automobiles as "rebuilt salvage". Detective Keteltas swore to the truth of his declaration before Judge Nickerson, and Judge Nickerson signed the seizure warrant.

Within the next four days (the record is unclear as to the specific dates), United States marshals seized the Statewide premises, hung "Out of Business" signs outside the building, interrupted telephone service, and sealed the premises. A UPS "Next Day Air Letter" sent to Statewide on November 27 was marked "RETURN TO SHIPPER" with the notations "THIS PACKAGE HAS BEEN RETURNED BECAUSE: Closed up by F.B.I." and "Out of business".

On November 25, 1991, Statewide sought an order to show cause

[w]hy an Order should not be entered by this Court, pursuant to Rule E(5) of the Supplementary [sic ] Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure, releasing Defendant STATEWIDE'S property, both real and personal, which has been attached by the United States Marshal * * * and dismissing Plaintiff's Complaint against STATEWIDE AUTO PARTS, INC. for insufficiency and unconstitutionality[.]

Judge Nickerson ordered the government to respond and set argument for December 4, 1991.

Along with the order to show cause, Statewide submitted an affidavit of Edward P. Muro, Statewide's secretary-treasurer, which stated that the Keteltas declaration, "while perhaps appearing to be of substance at first blush, upon closer scrutiny is revealed to be just a collection of unsubstantiated speculations and innuendos as relate to STATEWIDE that hardly justify [sic ] the imposition of the extreme penalty of extinction." Importantly, while the Edward Muro affidavit called into question some of the legal conclusions drawn by the government, it did not dispute any of the factual allegations contained in the Keteltas declaration.

The Edward Muro affidavit also contained this exhortation:

[W]e urge that the draconian type procedure employed in this non-drug, non-violence case that permit [sic ] such a pre-judgment, ex-parte [sic ] seizure and attachment of real and personal property and does not provide for a prompt post-seizure hearing is violative of our Fifth and Fourteenth Amendment rights to due process of law, even despite the fact that the property in question is commercial rather than residential. Particularly, since there is no emergency situation that triggered the governmental action--the last allegation of wrongdoing by STATEWIDE contained in the KETELTAS Declaration purportedly occurring months ago--and there is no allegation that STATEWIDE is currently engaged in ongoing wrongdoing.

Edward Muro's affidavit concluded by noting that the seizure and closure of Statewide

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was "causing what will soon become irreparable injury to the business and reputation of the corporation * * * it has already wreaked havoc with our customers since the marshal's [sic ] had initially posted signs proclaiming that we were out of business, and we will be permanently out of business if we are forced to remain closed until this forfeiture action is heard and determined" (emphasis in original).

Detective Keteltas then submitted a supplemental declaration which indicated, inter alia, that more than a dozen individuals--including claimant Muro--had been arrested on November 19 by the Nassau County Police Department for crimes related to the automobile-laundering scheme. This supplemental declaration further detailed the ongoing criminal activity which had been taking place on the premises of the various named corporations, including Statewide.

Judge Nickerson heard oral argument on the order to show cause on December 4, 1991. Noting that "[t]he object of our motion really is to have the Court allow our clients to continue doing business until the trial of this action", Statewide's attorney argued to the district court that since there was no "emergency" or exigent circumstance justifying a pre-notice seizure, the property should be summarily returned to Muro and Statewide. However, no evidence other than the already-submitted affidavits was presented. Judge Nickerson declined to vacate the seizure; he did, however, accord Muro and Statewide further opportunity to make evidentiary submissions. Statewide's attorney represented that he would make a further submission on his clients' behalf on December 6.

On December 6, however, Statewide submitted only the affidavit of its attorney, which did little more than repeat the arguments set forth in the Edward Muro affidavit. Even then, no evidentiary hearing was requested. On December 16 Judge Nickerson denied Statewide and Muro's motions, concluding that

[n]one of the papers submitted on behalf of the movants has refuted the substance of the statements made by Detective Keteltas in his declaration in support of the warrant or in his supplemental declaration submitted upon the motions. Thus there seems to be only a slight risk of erroneous deprivation of the movants' interest by reason of the issuance of the warrant. The allegations in the declarations by Detective Keteltas more than satisfied this court that there was probable cause to believe that the property to be seized was involved in transactions in violation of 18 U.S.C. § 1956.

A notice of appeal styled "Doe, Plaintiff, against Doe, Defendant" was filed on January 7, 1992. The anonymity was necessary because the district court's file had been sealed. The appeal was initially dismissed on January 24, 1992, for failure to comply with the requirements of this court's Civil Appeal Management Plan, but the dismissal was vacated and the case restored to the calendar on an expedited basis by order of this court dated February 20, 1992.

Since the district court's record was unsealed only after the notice of appeal was filed, some confusion remains as to the proper identity of the parties on this...

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