In re Known, 14-MC-1179 (ADS)
| Decision Date | 06 June 2015 |
| Docket Number | 14-MC-1179 (ADS) |
| Parties | IN RE THE PREMISES KNOWN AND DESCRIBED AS 100 SWEENEYDALE AVENUE, BAYSHORE, NEW YORK, A ONE STORY BRICK BUILDING WITH A SIGN THAT HAS THE NUMBER "100" (SUBJECT PREMISES) and THE PREMISES KNOWN AND DESCRIBED AS 15-13 132 STREET, COLLEGE POINT, NEW YORK A TAN BRICK WAREHOUSEWITH ONE CARGO BAY AND A SIGN ABOVE THE CARGO BAY THAT SAYS "EXCEL WHOLESALE INC. CASH AND SUPPLIERS OF HEALTH AND BEAUTY AID AND GENERAL MERCHANDISE 15-13" (SUBJECT PREMISES) |
| Court | U.S. District Court — Eastern District of New York |
APPEARANCES:
The Law Offices of Thomas F. Liotti
Attorneys for the Petitioners and Movants
Garden City, NY 11530
610 Federal Plaza
Central Islip, NY 11722
By: Charles P. Kelly, Assistant United States Attorney
This cases arises from an August 6, 2014 seizure by the United States ("the Government") of currency and allegedly counterfeit products located in warehouses owned by AKR Corporation ("AKR"), Wholesalers Bronx Corp. ("Wholesalers"), and Excel Whole Sale Distributors ("Excel"). The search and seizure was made pursuant to three search warrants (the"Search Warrants") issued on July 24, 2014 and August 1, 2014 by United States Magistrate Judge William D. Wall of the Eastern District of New York and United States Magistrate Judge Debra Freeman of the Southern District of New York.
On October 14, 2014, AKR, Wholesalers, Excel, and their owners and employees (collectively, the "Petitioners") commenced this miscellaneous action by petitioning the Court for an emergency order to show cause as to why the Court should not enter an order directing the Government to return the property and currency seized from the Petitioners' warehouses on August 6, 2014.
On January 10, 2015, the Court issued an order (the "January 10, 2015 Order") directing the Government to unseal the materials supporting the Search Warrants and to "release and make available" "all legitimate, non-counterfeit property."
Presently before the Court is a motion by the Petitioners for (i) an evidentiary hearing to determine whether the property seized by the Government in executing the Search Warrants is counterfeit; (ii) a probable cause hearing to determine the legality of the Government's seizure; and (iii) an order of contempt against the Government for allegedly failing to adhere to the January 10, 2015 Order.
For the reasons set forth below, the Court denies the motion by the Petitioners and directs the Clerk of the Court to close this case.
As is made clear below, this case has a complex procedural history involving three overlapping proceedings concerning the Petitioners' seized property — namely, an administrative proceeding, an emergency relief proceeding, and a civil forfeiture proceeding.
The Court notes that the facts recited below are not intended to resolve factual disputes in the proceedings parallel to the instant case.
The Petitioner Excel is a cosmetics distribution company whose place of business is located in College Point, New York. (Compl., 15-cv-2678, at ¶ 8.)
The Petitioner AKR is a cosmetics distribution company whose place of business is located in Bay Shore, New York. (Id. at ¶ 9.)
The Petitioner Manhattan is a cosmetics distribution company whose place of business is located in the Bronx, New York. (Id. at ¶ 10.)
On March 6, 2014, investigators with the Nassau County District Attorney's Office ("NCDA") executed six search warrants at locations associated with three companies: Best Price Traders NA, Inc. ("Best Price"), Universal Price, Inc. ("Universal Price"), and Glow Derma, Inc. ("Glow Derma" and collectively, the "Wholesale Companies"). (Compl., 15-cv-2678, at ¶¶ 12-13.) At these locations, the Government allegedly recovered tens of thousands of units of counterfeit health and beauty products. (Id.)
On March 21, 2014, the NDCA Office referred the case against Hamat Mullick ("Mullick") and Pardeep Malik ("Malik"), who owned and operated the Wholesale Companies, to the United States Attorney's Office for the Eastern District of New York. (Id. at ¶ 20.)
On July 16, 2014, a grand jury in Central Islip returned an indictment charging Mullick and Malik with five counts of: (i) conspiracy to traffic in counterfeit goods, 18 U.S.C. § 371; (ii) trafficking in counterfeit goods, 18 U.S.C. § 2320(a)(1); (iii) trafficking in counterfeit labels andpackaging, 18 U.S.C. § 2320(a)(2); (iv) tracking in counterfeit drugs, 18 U.S.C. § 2320(a)(4); and (v) conspiracy to commit mail fraud, 18 U.S.C. § 1349. (Id. at ¶ 22.)
Based on reviewing records and interviewing employees of Malik and Mullick, federal investigators identified Excel, AKR, and Manhattan as three of several other distributors who allegedly purchased counterfeit products from Malik and Mullick. (Id. at ¶ 24.)
On July 24, 2014, Judge Wall issued two search warrants under seal authorizing the search and seizure of properties located at 100 Sweeneydale Avenue, Bay Shore, New York, and 115-13 132nd Street, College Point, New York. (Liotti Decl. Dkt. No. 10, at ¶ 2.) The properties are owned by AKR and Excel, respectively. (Id.)
On August 1, 2014, Judge Freeman signed a third search warrant for a premises owned by Manhattan in the Bronx, New York. (Compl., 15-cv-2678, at ¶ 35.)
The Search Warrants were issued based on findings by Judge Wall and Judge Freeman that there was probable cause to believe that the buildings contained evidence, fruits, and instrumentalities of counterfeit goods and mail fraud.
On August 6, 2014, agents of the United States Department of Homeland Security, Immigration and Customs Enforcement, and Homeland Security Investigations ("HSI") executed the Search Warrants. (Compl., 15-cv-2678, at ¶ 36.) HSI seized $46,171 in cash, merchandise, and certain business records from the Petitioners' warehouses. (Branda Aff. at ¶ 15; Liotti Decl., Dkt. No. 10, at ¶ 4.)
As the pendency of administrative proceedings is a central issue in the present motion, the Court will provide background on the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), 18 U.S.C. § 983.
Under CAFRA the government can commence "nonjudicial civil forfeiture proceedings," "by send[ing] written notice to interested parties . . . in a manner to achieve proper notice as soon as practicable, and in no case more than 60 days after the date of the seizure." 18 U.S.C. § 983(a)(1)(A)(i).
After receiving notice, an interested party may file "a claim with the appropriate official after the seizure" "not later than the deadline set forth in the personal notice letter . . . except that if that letter is not received, then a claim may be filed not later than 30 days after the date of final publication of notice of seizure." 18 U.S.C. § 983(a)(1)(F).
In order to be valid, a claim must "(i) identify the specific property being claimed; (ii) state the claimant's interest in such property; and (iii) be made under oath, subject to penalty of perjury." 18 U.S.C. § 983(a)(2)(B).
Within 90 days of a valid claim being filed, the Government must file a civil complaint for forfeiture "in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims or return the property pending the filing of a complaint." 18 U.S.C. § 983(a)(3)(A).
Significantly, in a civil forfeiture proceeding, the Government must show, by a preponderance of the evidence, that the property is subject to forfeiture. 18 U.S.C. § 983(c)(1). Moreover, if the Government's theory of forfeiture is that the property "was used to commit orfacilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense." 18 U.S.C.A. § 983(c)(3).
On September 23, 2014, the Office of Customs and Border Protection, Department of Homeland Security ("CBP") commenced an administrative forfeiture proceeding (the "CBP Administrative Proceeding") under CAFRA against the property it seized from the Petitioners' warehouses by sending notice to all potential known claimants. (Compl., 15-cv-2678, at ¶ 38; Gov't Letter Br. at 2.)
On October 14, 2014, the Petitioners commenced this action by filing a petition requesting an Order to Show Cause as to why the Court should not direct the Government to (i) release the property of the Petitioners that it seized and (ii) unseal the affidavits supporting the Search Warrants issued by Judge Wall. (Dkt. No. 1.)
On October 15, 2014, the Court issued an Order to Show Cause and scheduled a hearing for October 24, 2014. (Dkt. No. 2.)
On October 24, 2014, the Court held a hearing regarding the Petitioners' requests. At the conclusion of the hearing, the Court issued an order directing the Government to unseal the affidavits supporting the Search Warrants within three months if the Government had not issued an indictment against the Petitioners. The Court further ordered that by October 29, 2014, the Government release and make available to the Petitioners "all legitimate, non-counterfeit property." (October 24, 2014 Hearing Tr. 23:1-24:5.)
On October 28, 2014, the Government alleges that the Petitioners filed a CAFRA election notice of claim form in the CBP Administrative Proceeding requesting that "CBP consider mypetition administratively before forfeiture proceedings are initiated." (Gov't Letter Br. at 2; see also Apr. 30, 2015 Tr. 26:25-27:6.) The Petitioners do not appear to dispute that they filed such a notice but claim that their petition related to the currency seized by CBP and not the merchandise. (Pets.' Letter Mot. at 3.)
The Government alleges that the form submitted by the Petitioners to CBP did not contain sufficient information to be...
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