U.S. v. Daccarett, No. 044000804961700114433
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
| Writing for the Court | GEORGE C. PRATT; In a related action, claimants sued the intermediary banks in the United States District Court for the Eastern District of New York, Jack B. Weinstein; At the end of the trial |
| Citation | 6 F.3d 37 |
| Parties | -6248, 62 USLW 2203 UNITED STATES of America, Plaintiff-Appellee, United States of America, Counter-Defendant-Appellee, v. Johnny DACCARETT; Francisco J. Palacio; Creaciones Ivonne; Sabmar Ltda; Industrias Marathon Limitada; Comercial Samora Ltda; Emperesa Nelson Gomez, O. "Faster"; Siracusa Trading Corp.; Heriberto Castro Meza and Nelson Gomez, Claimants, Merrill Lynch Bank, Certain funds contained in Accountheld at The Merrill Lynch Bank 1 Columbus; Pierce, Fenner & Smith; Manufacturers Hanover Trust Company; Southeast Bank & Bank of New York in the Names of Siracusa Trading Corporation; Heriberto Castro-Mesa; Jose Santacruz-Londono; Jaime Vargas; Harold Castro; Jairo Ocampo; Ana Milena Santacruz; Ripon Holdings; Manufacturas de Modas; Confecciones Tio; Manufacturas Samir Ltda; Manufacturas Jolimer Ltda; Barranquilla Industrial Ltda; Industrial Marathon; International Exchange & Investment Corp.; Valery Fashions Ltd.; Comercializadora de Satander Ltda; Manufacturas del Atlantico; Confecciones Elizabeth; Industrial de Confeccion Ltda; Banco Atlantico and All Funds Transferred to Through and or By Merrill Lynch, Pierce Fenner Smith, Inc., Banco Atlantico Manufacturers Hanover Trust Company, Southeast Bank and Bank of New York on Behalf of or for the Benefit of the Aforesaid Claimants to Any All Banks in Colombia and All Bank Accounts Thereof, Including But Not Limited to Banco de Caldas Account Numbers 0999306226 0331, 544-7-1844 and 544-710-844; Banco del Estado Account Number 8900033088; Comercial Costena de Confecciones Ltda; Producto & Textiles Columbianos Ltda; Produtexcol Ltda; Gomez Nelson and Costafast, Defendants, Abuchaibe Hnos. Ltda; Manufacturas Internacionales Ltda; Organizacion J.D. Ltda; Manufacturas JD Ltda; Comercial Samora Ltda; Creaciones Viviana Ltda; Comercial Estrella Ltda; Confecciones y Tejidos Nacionales Ltda; Manufacturera del Atlantico Ltda; Industrias Marathon Limitada; Manufacturas de Modas Ltda; Incolco Ltda; Creaciones Karen; Tote Expo |
| Docket Number | Nos. 1264,1265,No. 044000804961700114433,D |
| Decision Date | 10 September 1993 |
Page 37
United States of America, Counter-Defendant-Appellee,
v.
Johnny DACCARETT; Francisco J. Palacio; Creaciones Ivonne;
Sabmar Ltda; Industrias Marathon Limitada; Comercial
Samora Ltda; Emperesa Nelson Gomez, O. "Faster"; Siracusa
Trading Corp.; Heriberto Castro Meza and Nelson Gomez, Claimants,
Merrill Lynch Bank, Certain funds contained in Account No.
044000804961700114433 held at The Merrill Lynch Bank 1
Columbus; Pierce, Fenner & Smith; Manufacturers Hanover
Trust Company; Southeast Bank & Bank of New York in the
Names of Siracusa Trading Corporation; Heriberto
Castro-Mesa; Jose Santacruz-Londono; Jaime Vargas; Harold
Castro; Jairo Ocampo; Ana Milena Santacruz; Ripon
Holdings; Manufacturas de Modas; Confecciones Tio;
Manufacturas Samir Ltda; Manufacturas Jolimer Ltda;
Barranquilla Industrial Ltda; Industrial Marathon;
International Exchange & Investment Corp.; Valery Fashions
Ltd.; Comercializadora de Satander Ltda; Manufacturas
del Atlantico; Confecciones Elizabeth; Industrial de
Confeccion Ltda; Banco Atlantico and All Funds Transferred
to Through and or By Merrill Lynch, Pierce Fenner Smith,
Inc., Banco Atlantico Manufacturers Hanover Trust Company,
Southeast Bank and Bank of New York on Behalf of or for the
Benefit of the Aforesaid Claimants to Any All Banks in
Colombia and All Bank Accounts Thereof, Including But Not
Limited to Banco de Caldas Account Numbers 0999306226 0331,
544-7-1844 and 544-710-844; Banco del Estado Account Number
8900033088; Comercial Costena de Confecciones Ltda;
Producto & Textiles Columbianos Ltda; Produtexcol Ltda;
Gomez Nelson and Costafast, Defendants,
Abuchaibe Hnos. Ltda; Manufacturas Internacionales Ltda;
Organizacion J.D. Ltda; Manufacturas JD Ltda; Comercial
Samora Ltda; Creaciones Viviana Ltda; Comercial Estrella
Ltda; Confecciones y Tejidos Nacionales Ltda;
Manufacturera del Atlantico Ltda; Industrias Marathon
Limitada; Manufacturas de Modas Ltda; Incolco Ltda;
Creaciones Karen; Tote Export Manufacturas Ltda;
Creaciones Ivonne; Confecciones Zuny and Valery Fashions,
Defendants-Appellants,
Emperesa Nelson Gomez, O. "Faster" and Costafast, Counter-Claimants.
Second Circuit.
Decided Sept. 10, 1993.
Page 42
Isidoro Rodriguez, Barranquilla, Colombia S.A., for defendants-appellants Manufacturas Internacionales Ltda., Abuchaibe Hons. Ltda., Comercial Samora Ltda., Creaciones Viviana Ltda., Comercial Estrella Ltda., Confecciones y Tejidos Nacionales Ltda., Manufacturera del Atlantico Ltda., Manufacturas JD Ltda., Organizacion JD Ltda., and Industrias Marathon Ltda.
Montgomery Blair Sibley, Miami, FL (Davis, Markel & Edwards, of counsel), for defendants-appellants Confecciones Zuny Ltda., Manufacturas de Modas Ltda., Incolco Ltda., Valery Fashions Ltda., Creaciones Karen, Tote Export Manufacturas Ltda., and Creaciones Ivonne.
Arthur P. Hui, Asst. U.S. Atty., Brooklyn, NY (Zachary W. Carter, U.S. Atty. E.D.N.Y., Robert L. Begleiter, Deborah B. Zwany, Jennifer C. Boal, and Gary R. Brown, Asst. U.S. Attys., of counsel), for appellee.
Before: OAKES, PIERCE, and PRATT, Circuit Judges.
Page 43
GEORGE C. PRATT, Circuit Judge:
Illegal sales of controlled substances generate billions of dollars in revenue every year. Narcotics traffickers continually seek to make their illegal income appear legitimate. When international drug conglomerates attempt to move their profits beyond the reach of law enforcement authorities, their monies are frequently funneled through financial institutions in the United States. Money laundering has become so sophisticated
that it is not unusual to find an intricate web of domestic and foreign bank accounts, dummy corporations and other business entities through which funds are moved, almost instantaneously, by means of electronic fund transfers.
House Committee on Banking, Finance and Urban Affairs, H.R.Rep. No. 746, 99th Cong., 2d Sess. 16 (1986). The arteries of international banking systems have become the "lifeblood" of the international drug trade. See 132 Cong.Rec. S9938, S9986 (daily ed. July 31, 1986); President's Comm'n on Organized Crime, The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering 4-8 (1984).
In an attempt to stop the flow of illicit money back to drug suppliers, congress in the past decade has passed several acts aimed at drug-trafficking and money-laundering activities. See, e.g., International Narcotics Control Act of 1992, Pub.L. No. 102-583, 106 Stat. 4914, codified at 12 U.S.C. Sec. 635, 22 U.S.C. Secs. 2151, 2291; Money Laundering Control Act of 1986, Pub.L. No. 99-570, 100 Stat. 3207, codified at 18 U.S.C. Secs. 1956, 1957. While a money-laundering conviction results in automatic forfeiture to the government of any property involved in the offense, see 18 U.S.C. Sec. 982(a), the government can also institute civil forfeiture proceedings without first obtaining a conviction. See 18 U.S.C. Sec. 981. This case tests the effectiveness of civil forfeiture as a tool for seizing and forfeiting proceeds of narcotics trafficking as they pass through our banking system.
There are two groups of claimants: the "Atlantico Claimants", consisting of Manufacturas Internacionales Ltda., Abuchaibe Hnos. Ltda., Comercial Samora Ltda., Creaciones Viviana Ltda., Comercial Estrella Ltda., Confecciones y Tejidos Nacionales Ltda., Manufacturera del Atlantico Ltda., Manufacturas J.D. Ltda., Organizacion J.D. Ltda., and Industrias Marathon Ltda.; and the "Barranquilla Claimants", consisting of Confecciones Zuny Ltda., Manufacturas de Modas Ltda., Incolco Ltda., Valery Fashions Ltda., Creaciones Karen, Ltda., Tote Export Manufacturas Ltda., and Creaciones Ivonne Ltda. Both sets of claimants appeal from a final judgment and other rulings of the United States District Court for the Eastern District of New York, Jack B. Weinstein, Judge, following a jury verdict that forfeited to the government more than $10,000,000, pursuant to 18 U.S.C. Sec. 981 and 21 U.S.C. Sec. 881. United States v. All Funds on Deposit in Any Accounts Maintained at Merrill, Lynch, Pierce, Fenner & Smith, 801 F.Supp. 984 (E.D.N.Y.1992) (All Funds ) (technical amendment to opinion filed on Sept. 14, 1992).
The forfeitures arose out of an international effort to impede the drug-trafficking and money-laundering activities of the Cali cartel, a Colombian conglomerate headed by Jose Santacruz-Londono, which allegedly imports approximately 3000 kilograms of cocaine a month into the United States. The cartel uses bank accounts throughout the United States, Europe, and Central and South America to store and move its narcotics proceeds. Its funds are moved through various international banks by means of electronic funds transfers (EFTs) for ultimate deposit into Colombian bank accounts.
When a customer wants to commence an EFT, its bank sends a message to the transfer system's central computer, indicating the amount of money to be transferred, the sending bank, the receiving bank, and the intended beneficiary. The central computer then adjusts the account balances of the sending and receiving banks and generates a printout of a debit ticket at the sending bank and a
Page 44
credit ticket at the receiving bank. After the receiving bank gets the credit ticket, it notifies the beneficiary of the transfer. If the originating bank and the destination bank belong to the same wire transfer system, then they are the only sending and receiving banks, and the transfer can be completed in one transaction. However, if the originating bank and the destination bank are not members of the same wire transfer system, which is often the case with international transfers, it is necessary to transfer the funds by a series of transactions through one or more intermediary banks.The seizures at issue were precipitated by the arrests of three Santacruz-Londono associates in Luxembourg on June 28 and 29, 1990. These men had opened hundreds of bank accounts throughout Europe and deposited large sums of money in them for the Cali cartel. Anticipating that these arrests would trigger an effort by the cartel to move its monies to Colombia before they could be confiscated, Luxembourg law-enforcement authorities requested the assistance of several countries to freeze monies related to the cartel. During July and August 1990, a flurry of electronic funds transfers from the suspect accounts ensued, resulting in the seizure of $30 million in Europe, $16 million in Panama, and $12 million in the United States.
The $12 million seized in the United States was the aggregate of dozens of EFTs sent through New York City intermediary banks that had correspondent banking relationships with Panamanian and Colombian banks, including Banco Atlantico, Manufacturers Hanover, The Bank of New York, and Merrill Lynch. After receiving the subject EFTs, the intermediary banks were supposed to credit the accounts of designated correspondent Colombian banks; the Colombian banks were then supposed to notify the beneficiaries that the funds were available. However, through both oral orders and a series of eight arrest warrants in rem, government agents instructed the intermediary banks in New York to attach "all funds" on deposit in the names of various individuals and entities connected with Santacruz-Londono and "all related entities and individuals", and to inform the agents about all transfers that were destined for a third-party beneficiary in Colombia. The intermediary banks complied with the agents' directions; they initially froze the seized funds and later transferred them to the clerk of the court who now holds them pending the outcome of this appeal.
Each successive warrant included more names. If the government agents seized funds destined for a...
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