U.S. v. Jefferson

• Citation: 632 F.Supp.2d 608
• Decision Date: 08 July 2009
• Docket Number: Criminal Action No. 08-140.
• Parties: UNITED STATES of America v. Betty JEFFERSON, Angela Coleman, Mose Jefferson, Renee Gill Pratt.
• Court: U.S. District Court — Eastern District of Louisiana

632 F.Supp.2d 608

UNITED STATES of America v. Betty JEFFERSON, Angela Coleman, Mose Jefferson, Renee Gill Pratt.

Criminal Action No. 08-140.

United States District Court, E.D. Louisiana.

July 8, 2009.

Dorothy Manning Taylor, Daniel Patrick Friel, U.S. Attorney's Office, New Orleans, LA, for United States of America.

ORDER AND REASONS

IVAN L.R. LEMELLE, District Judge.

Before the Court are Defendants Betty Jefferson and Mose Jefferson's Motions to Dismiss Lis Pendens and Forfeiture Claims. (Rec. Docs. 130, 138). The motions seek to dismiss lis pendens and forfeiture claims on Betty Jefferson's properties located at 936 Jackson Avenue, New Orleans, and 1725 Valmont Street, New Orleans and the properties located at 2712 and 2714-16 Loyola Ave.¹ and 3311-13 S. Saratoga Street, New Orleans in which Mose Jefferson has an interest. The motions are opposed. (Rec. Doc. 151). The Court heard oral arguments on the motions on June 17, 2009, and subsequently ordered the parties to engage in good faith discussions regarding the motions and the possibility of utilizing a less restrictive means than lis pendens to reasonably protect all parties' interests and to submit a joint report on the discussions. The parties failed to come to an agreement and failed to submit joint reports. After review of the parties' separate reports, the Court held further oral argument on the matter on July 2, 2009. After review of the pleadings, applicable law, and oral argument of the parties, and for the reasons that follow,

IT IS ORDERED that Defendants Betty Jefferson and Mose Jefferson's Motions to Dismiss Lis Pendens and Forfeiture Counts (Rec. Docs. 130, 138) are DENIED without prejudice to re-urge upon submission of additional evidence of inability to sell or otherwise encumber the subject properties due to the lis pendens.

BACKGROUND

The original June 4, 2008 indictment against Defendants Betty Jefferson, Angela Coleman, and Mose Jefferson included charges of conspiracy to commit mail fraud and program fraud, aggravated identity theft, program fraud, mail fraud, false statements, tax evasion, and conspiracy to commit money laundering. The indictment contained notices of mail fraud and program fraud forfeiture, aggravated identity theft forfeiture, and money laundering forfeiture. On December 8, 2008, the Government filed a Bill of Particulars informing Defendants of its intent to seek forfeiture of the following properties located in New Orleans: 2712 and 2714-2716 Loyola Ave., 3311-13 S. Saratoga St., 1723-1725 Valmont St., and 936 Jackson Ave. On that same date the Government filed a Notice of Lis Pendens on the Loyola properties. The Government filed a Notice of Lis Pendens on the S. Saratoga property on December 9, 2008 and notices on the 936 Jackson Ave. and 1725 Valmont St. properties on February 11, 2009. The Government recorded the notices of lis pendens in the Orleans Parish Clerk of Court Mortgage and Conveyance Divisions.

On May 22, 2009, the grand jury returned a superseding indictment against Defendants Betty Jefferson, Angela Coleman, and Mose Jefferson and added Defendant Renee Gill Pratt. The superseding indictment contained many of the same allegations presented in the original indictment; the major difference between the indictments is that Count One of the Superseding Indictment is now a conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The Superseding Indictment also contains notices of forfeiture, specifically notices of racketeering forfeiture, mail fraud forfeiture, and money laundering forfeiture. The racketeering forfeiture notice indicates the Government's intent to seek forfeiture of the same four New Orleans properties referenced in the December 8, 2008 Bill of Particulars: 2712 and 2714-2716 Loyola Ave., 3311-13 S. Saratoga St., 1723-1725 Valmont St., and 936 Jackson Ave. Defendant Betty Jefferson seeks dismissal of the lis pendens and forfeiture counts relative to her properties located at 936 Jackson Avenue and 1725 Valmont Street, and Defendant Mose Jefferson seeks dismissal of the lis pendens and forfeiture counts relative to the properties located at 2712 and 2714-16 Loyola Ave. and 3311-13 S. Saratoga Street, in which he has an interest.² Attorneys for Mose Jefferson, Mr. Lemann and Mr. Fawer, recorded a mortgage on the Loyola Ave. properties as a security for their attorney fees on October 31, 2008, and assert that their mortgage interest is superior to the Government's interest in that property. Additionally, ownership of the Loyola properties was transferred to Attorneys Lemann and Fawer on June 29, 2009.

The Court held oral argument on the motions on June 17, 2009, and ordered the parties to engage in good faith discussions regarding the possibility of utilizing a less restrictive means than lis pendens to protect all parties' interests. (Rec. Doc. 157). The parties were further ordered to submit a joint report on their discussions on or before June 29, 2009. It appears that the Government only met with the attorneys for Mose Jefferson and engaged in no discussions regarding Betty Jefferson's properties. The parties failed to reach an agreement and failed to submit a joint report, choosing instead to submit individual reports. The reports indicate that Mr. Lemann and Mr. Fawer's joint secured interest in the Loyola Ave. property was approximately $250,000.00. Mr. Lemann and Mr. Fawer presented a proposal that involved sale of the property or use of it as collateral for a bank loan of no more than $250,000. If sold, either directly by Lemann and Fawer or to repay a loan for which the property served as collateral, all proceeds above $250,000 would be placed in the registry of the Court. Lemann and Fawer also suggested that the property be available as a substitute asset after repayment of the loan. The Government ultimately rejected this proposal and offered instead to withdraw the lis pendens and allow liquidation of the Loyola Ave. property only on the condition that the entirety of the proceeds be placed in the Registry of the Court until a conviction was obtained and a jury ordered the Loyola Ave. property forfeited. Lemann and Fawer have indicated their intent to withdraw from representing Mose Jefferson in both cases (the present case, 08-140, and Case No. 08-085) in the event the lis pendens is not removed on July 2, 2009.

Defendants assert that the notices of lis pendens cloud the title of the properties at issue and thereby prevent Defendants from selling the property with clear title. Defendants assert that this alleged inability to sell the property deprives them of proceeds that could be used to pay their legal fees and other defense costs. Defendants argue that this amounts to a violation of their Sixth Amendment right to private counsel of choice. Defendants assert that the properties were not purchased with any funds or proceeds described in the indictment as unlawfully obtained and argue that the proceeds allegedly related to the properties is greatly disproportionate to the value of the properties.³ Defendants urge the Court to direct the Government to utilize less restrictive means of protecting its interests, such as bonds in the amounts alleged to be associated with the properties or an order directing Defendants to deposit the amounts into the Registry of the Court following sale of the properties.

Defendants' primary argument is that the lis pendens is a de facto seizure which is prohibited because the forfeiture provisions of 18 U.S.C.1963, 18 U.S.C. 981(a)(1)(C), 28 U.S.C. 2461, 18 U.S.C. 982(b)(1), and 21 U.S.C. 853 apply only upon conviction and at the time of sentencing. Defendants argue that the Government's notices of lis pendens are therefore deficient because no conviction has been obtained at this stage of the proceedings. Defendants also make a rather tenuous argument that forfeiture, and consequently lis pendens, cannot be based on mail fraud because mail fraud is not explicitly listed in 18 U.S.C. 981(a)(1)(C) and the mail fraud statute makes no independent provision for statutory forfeiture. Defendants admit, however, that § 981(a)(C) includes "specified unlawful activity" as defined in 18 U.S.C.1956(c)(7)(A). 18 U.S.C. 1956(c)(7)(A) in turn includes any offense listed under 18 U.S.C.1961(1), which does include 18 U.S.C. § 1341 (mail fraud). Defendants argue, however, that Congress did not intend to include mail fraud in § 981's civil forfeiture list because it could have listed § 1341 explicitly, as it listed § 1344 (bank fraud).

Attorneys for Mose Jefferson further argue that their interest in Mose Jefferson's Loyola Ave. property, procured to secure their fees for his defense, is superior to the Government's interest. In support the attorneys point to the fact that their mortgage interest was recorded prior to the Government's December 8, 2008 filing of its Bill of Particulars and associated Notices of Lis Pendens in the present case.

The Government argues that under Louisiana law lis pendens is not a seizure and is, in fact, the least restrictive means of protecting the Government's interests. The Government also argues that the lis pendens does not affect Defendants' Sixth Amendment right to counsel of their choice because the forfeiture statute provides no exception for attorney's fees and Defendants' right to counsel of choice "does not extend to a defendant who insists on representation by an attorney the defendant cannot afford." (Rec. Doc. 151 at 10). The Government further asserts that Defendants' alternative suggestions of a bond or depositing a portion of the proceeds of sale into the registry of the Court are inadequate because RICO may require Defendants to forfeit their entire interests in the properties, not just amounts that can be recognized as related on the face of the indictment. Further, the Government argues, the determination as to what assets are subject to forfeiture is not determined...