U.S. v. Hosseini
| Decision Date | 16 August 2007 |
| Docket Number | No. 05 CR 254.,05 CR 254. |
| Citation | 504 F.Supp.2d 376 |
| Parties | UNITED STATES of America, Plaintiff, v. Amir HOSSEINI and Hossein Obaei, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Daniel D. Rubinstein, Joel M. Hammerman, Lisa Marie Noller, United States Attorney's Office, Chicago, IL, for Plaintiff.
Marc William Martin, Marc W. Martin, Ltd., Barry David Sheppard, Attorney at Law, Andrew Theodore Staes, Stephen David Scallan, Staes & .Scallan P.C., Elliot M. Samuels, Chicago, IL, for Defendants.
On February 26, 2007 a jury found defendants Amir Hosseini ("Hosseini") and Hossein Obaei ("Obaei") guilty on all counts in the multicount superseding indictment. They were jointly convicted of a racketeering conspiracy in violation of the Racketeering, Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. § 19621) (Count 12) and of Section 1956(a)(1)(B)(i) money laundering and a money laundering conspiracy (Counts 3, 10 and 11). In addition, Hosseini was found individually guilty of money laundering (Count 4), two counts of mail fraud under Sections 1341 and 1342 (Counts 97-98) and dozens of counts of structuring transactions to avoid reporting requirements in contravention of 31 U.S.C. § 5324(a)(3) and (d)(2) (Counts 13-63). For his part, Obaei was also found guilty of aiding and abetting a narcotics trafficking conspiracy under Section 2 and 21 U.S.C. § 846 (Count 2), four more counts of money laundering (Counts 6-9), three counts of Section 1344(2) bank fraud (Counts 94-96), two counts of mail fraud (Counts 99-100) and numerous structuring counts (Counts 64-71, 73-93).
Based on the RICO, money laundering and structuring convictions, the government now pursues the forfeiture aspects of the superseding indictment, seeking forfeiture of significant assets pursuant to Section 1963 (RICO), Section 982(a) (money laundering) and 31 U.S.C. § 5317(c)(1) ("Section 5317(c)(1)"3) (structuring). Both defendants and the government had agreed before trial that this Court rather than the jury should decide the extent of forfeiture and that it may for that purpose make all necessary findings of fact based on the jury verdict, the trial evidence and the parties' submissions.
In sum, this opinion holds that each defendant's entire stock and any other ownership interest in Amer Leasing Sales, American Car Exchange and SHO Auto Credit (collectively "Dealerships"4) are forfeitable, as are also the real estate properties specified in the superseding indictment. But this opinion further holds that the government has failed to prove entitlement to the additional money forfeiture that it has sought.
In brief summary, over a period of many years Hosseini and Obaei conducted a racketeering conspiracy through their ownership of the three used car Dealerships. Hosseini owned Amer Leasing Sales, Obaei owned American Car Exchange, and SHO Auto Credit was owned by Obaei and Hosseini together. They used the Dealerships in large part to sell cars to drug dealers who would pay for the vehicles with large cash payments (thousands of dollars in small denominations) that the jury necessarily found were proceeds of illegal drug sales. Hosseini and Obaei would then attempt to conceal — to launder — those illegal proceeds by means of creative paper work documenting the sales.
In a further effort to hide their large illicit cash business, Hosseini and Obaei took great care not to deposit $10,000 or more in cash into their business bank accounts at any one time (to avoid triggering the banks' mandatory IRS reporting requirements). Indeed, the trial evidence demonstrated that among the three Dealerships over a multiyear span, millions of dollars of cash deposits into the business bank accounts were divided up into thousands of deposits, only five of which equaled $10,000 or more (Government Exhibit LT,. Ex."i Schindler 4, 7, 11). On some days four, five or even seven deposits of less than $10,000 each were made into the same account (G. Ex. Schindler 12).
As stated earlier, Congress has provided for criminal forfeiture based on Hosseini's and Obaei's RICO, money laundering and structuring convictions, and the parties have agreed that this Court should make any necessary factual findings for that purpose. At the outset that calls for a decision as to the government's burden of proof on that issue.
In the context of 21 U.S.C. § 853(a) criminal forfeiture in drug cases, United States v. Patel, 131 F.3d 1195, 1200 (7th Cir.1997) (citations omitted) has taught:
It is by now well settled that criminal forfeiture under section 853(a) is considered an element of the defendant's sentence, rather than an element of the underlying crime. As such, the government need only establish its right to forfeiture by a preponderance of the evidence, the standard applicable at sentencing, rather than by proof beyond a reasonable doubt.
And United States v. Vera, 278 F.3d 672, 673 (7th Cir.2002) has held that because with Section 853(c) forfeiture "there is no `prescribed statutory maximum' and no risk that the defendant has been convicted de facto of a more serious offense," Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000) did not change the rule that forfeiture may be decided "on a preponderance standard." Although United States v. Swanson, 394 F.3d 520, 526 n. 2 (7th Cir.2005) noted that the then-anticipated decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) might affect that rule, the post-Booker decision in United States v. Melendez, 401 F.3d 851, 856 (7th Cir.2005) has reiterated that criminal forfeiture may be decided by a preponderance and, not a beyond-a-reasonable-doubt standard.
In addition to those broad statements that are not tied to any specific statutory language of Section 853(a), both money laundering forfeiture (in Section 982(b)(1)) and structuring forfeiture (in Section 5317(c)(1)(B)) explicitly incorporate the procedures used in Section 853(a) forfeiture, certainly suggesting that a preponderance standard should also apply under those statutes (cf. Swanson, 394 F.3d at 526, applying Vera to Section 982(a)). With no statutory language pointing to a different result, this opinion will therefore apply a preponderance standard under Sections 982(a) and 5317(c)(1).
One court has found that a close reading of the statutory language of RICO Section 1963 presents a different situation altogether, requiring the use of a beyond-areasonable-doubt standard in forfeiture proceedings under that section (United States v. Pelullo, 14 F.3d 881, 901-06 (3d Cir.1994)). But other courts — finding guidance in Libretti v. United States, 516 U.S. 29, 38-39, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995) — have come to the opposite conclusion that Section 1963 also requires only proof by a preponderance of the evidence (United States v. Corrado, 227 F.3d 543, 550-51 (6th Cir2000); United States v. DeFries, 129 F.3d 1293, 1312 (D.C.Cir. 1997) (per curiam)). And other courts have also suggested, though without deciding, that a preponderance standard should apply (see, e.g., United States v. Houlihan, 92 F.3d 1271, 1299 n. 33 (1st Cir.1996)).
No case from our own Court of Appeals appears to have addressed the issue squarely. For example, United States v. Horak, 833 F.2d 1235, 1243-44 (7th Cir. 1987), while accepting that the government had agreed there to a beyond-a-reasonable-doubt standard,5 still took the trouble of citing a string of cases that showed the question was still open in this circuit at that time. On balance, Pelullo is clearly the minority view (see Stefan D. Cassella, Does Apprendi v. New Jersey Change the Standard of Proof in Criminal Forfeiture Cases?, 89 Ky. L.J. 631, 632 & 632 n. 3 (2001)), so that this opinion could well apply the lesser requirement of proof by a preponderance of the evidence.
But with all of that said, this Court is left with the same guilt feelings that should be harbored by a court that has, for example, painstakingly analyzed a choice of law issue on any subject (such as the standard of proof) that poses no more than a "false conflict" (see, e.g., Micro Data Base Sys., Inc. v. Dharma Sys., Inc., 148 F.3d 649, 653-54 (7th Cir.1998)). On the evidence in the record, this Court would reach the same findings of fact under either a preponderance or a beyond-a-reasonable-doubt standard. That is, wherever the government has made its proof it has done so beyond a reasonable doubt, and wherever the government has failed in its showing it has done so whether viewed under a reasonable doubt framework or through a preponderance lens.
As to the first category of property sought by the government, there is no doubt that the entirety of each defendant's stock and any other ownership interest in Amer Leasing Sales, American Car Exchange and SHO Auto Credit is forfeitable. While the government seeks forfeiture of those interests via several theories (under RICO and Sections 982(a) and 5317(c)(1)(A)), that result is so clearly called for under RICO Section 1963(a)(2) that this opinion needs to address only that theory.
Once the jury convicted Obaei and Hosseini of engaging in the racketeering conspiracy in violation of Section 1962 as charged in Count 1, a forfeiture order pursuant to Section 1963(a) became mandatory. Section 1963(a) demands that any defendant found guilty of violating Section 1962:
shall forfeit to the United States, irrespective of any provision of State law —
(1) any interest the person has acquired or maintained in violation of section 1962;
(2) any —
(A) interest in;
(B) security of;
(C) claim against; or
(D) property or contractual right of any kind affording a source of influence over;
any enterprise which the person has established, operated,...
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