U.S. v. Monsanto

Decision Date22 June 1989
Docket NumberNo. 436,D,436
Citation924 F.2d 1186
PartiesUNITED STATES of America, Appellee, v. Peter MONSANTO, Defendant-Appellant. ocket 87-1397. . Remanded
CourtU.S. Court of Appeals — Second Circuit
Order on Denial of Rehearing and

Rehearing En Banc Feb. 28, 1991.

Order on Denial of Rehearing by the

Original Panel April 4, 1991.

Edward M. Chikofsky, New York City, for defendant-appellant.

Mark C. Hansen, Asst. U.S. Atty. for the S.D.N.Y., New York City (Otto G. Obermaier, U.S. Atty., David E. Brodsky, Asst. U.S. Atty. for the S.D.N.Y., New York City, of counsel), for appellee.

Arthur L. Liman, New York City (Catherine J. Ross, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, of counsel), for amici curiae the Committees on Criminal Advocacy and on Criminal Law of the Ass'n of the Bar of the City of New York, the New York Council of Defense Lawyers, the New York Criminal Bar Ass'n, and the New York State Ass'n of Criminal Defense Lawyers.

Before OAKES, Chief Judge, FEINBERG, MESKILL, NEWMAN, KEARSE, CARDAMONE, WINTER, PRATT, MINER, ALTIMARI, MAHONEY, WALKER and McLAUGHLIN, Circuit Judges.

MAHONEY, Circuit Judge, with whom FEINBERG, MESKILL, JON O. NEWMAN, KEARSE, GEORGE C. PRATT, and McLAUGHLIN, Circuit Judges, join:

This case comes to us on remand from the Supreme Court of the United States. We decide two issues under a provision added by the Comprehensive Forfeiture Act of 1984 (the "CFA"), 21 U.S.C. Sec. 853 (1988): 1 (1) whether the fifth and sixth amendments, considered in combination, require an adversary post-restraint, pretrial hearing in order to continue a restraint ordered ex parte, pursuant to section 853(e)(1)(A), of assets needed to retain counsel of choice; and (2) if so, whether grand jury determinations of probable cause underlying an indictment may be reconsidered in such a hearing. For the reasons set forth below, we answer both questions in the affirmative.

The initial panel opinion in this case, 836 F.2d 74 (2d Cir.1987) ("Monsanto I"), is vacated. We reaffirm, however, the ruling in Monsanto I remanding for a pretrial hearing, but determine that future such hearings shall be governed by a "probable cause" standard.

Background

The history of this case on appeal traces through three reported opinions: (1) the initial panel decision (with one judge dissenting) in Monsanto I; (2) the in banc decision of this court in United States v. Monsanto ("Monsanto II"), 852 F.2d 1400 (2d Cir.1988) (in banc) (per curiam); and (3) the decision of the Supreme Court of the United States in United States v. Monsanto ("Monsanto III"), 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989). Although we assume the reader's familiarity with these decisions, we shall briefly recount the developments preceding our decision today.

In a multicount indictment unsealed on July 8, 1987, appellant Peter Monsanto was charged with RICO, narcotics, continuing criminal enterprise ("CCE"), and firearms violations. The indictment also alleged that a home, an apartment, and $35,000 in cash were subject to forfeiture under 21 U.S.C. Sec. 853(a)(1) (1988) because they were "property constituting, or derived from, any proceeds [Monsanto] obtained, directly or indirectly, as the result" of narcotics offenses, id.

On the day the indictment was unsealed, the United States District Court for the Southern District of New York, John F. Keenan, Judge, granted the government's application for an ex parte restraining order, pursuant to section 853(e)(1)(A), prohibiting Monsanto from directly or indirectly transferring or encumbering the home or the apartment.

In August, 1987, Monsanto moved to vacate or modify the restraining order, seeking (1) permission to use the restrained assets to retain private trial counsel, and (2) a declaration that legal fees paid to such counsel would be exempt from post-trial forfeiture under the "relation back" provision of 21 U.S.C. Sec. 853(c) (1988). Monsanto contended that the CFA did not apply to property needed to pay attorney's fees; in the alternative, he argued that the statute, if applicable to such property, would impermissibly interfere with his qualified sixth amendment right to counsel of choice.

The district court denied Monsanto's motion, and Monsanto thereupon brought an expedited interlocutory appeal to this court. In Monsanto I, a panel of this court, with (now) Chief Judge Oakes in dissent, rejected Monsanto's statutory and sixth amendment claims. The panel held, however, that the fifth and sixth amendments, considered in combination, require notice and a pretrial, adversary hearing where the government wishes to continue an order restraining assets needed to pay a defendant's counsel of choice. 836 F.2d at 82-85. The panel ruled that the government would have the burden at such a hearing to "demonstrate the likelihood that the assets are forfeitable," thus providing a "procedural check against the government's discretion to limit CCE and RICO defendants' choice of counsel simply by obtaining a forfeiture charge in the indictment." 836 F.2d at 84. It held, further, that where the government fails that burden, "any funds thereafter used to pay legitimate attorney's fees [would] be exempt from any future post-trial forfeiture." Id.

The panel remanded the case to the district court, which then held a hearing pursuant to the panel's mandate. At the conclusion of the hearing, the district court, finding that the government had met its burden, ruled that the restraining order would continue in effect. Monsanto was thereafter brought to trial, and was ultimately convicted on all counts charged in the indictment. His direct appeal is pending.

Meanwhile, this court voted, in January 1988, to rehear Monsanto's interlocutory appeal in banc. Thereafter, by an eight-four vote, the in banc court held, albeit pursuant to differing rationales, that

the order of the district court denying Monsanto's motion should be vacated and the case remanded with instructions to modify the restraining order to permit Monsanto access to restrained assets to the extent necessary to pay legitimate (that is, nonsham) attorney's fees in connection with the criminal charges against him.

Monsanto II, 852 F.2d at 1402. A majority of the in banc court also "agree[d] that any such fees paid to Monsanto's defense counsel are exempt from subsequent forfeiture pursuant to 21 U.S.C. Sec. 853(c)." Id.

The Supreme Court thereafter granted certiorari, 488 U.S. 941, 109 S.Ct. 363, 102 L.Ed.2d 353 (1988), and, in Monsanto III reversed the judgment of the in banc court. After first concluding that the forfeiture and pretrial restraining order provisions of section Sec. 853 provide no exemption for assets needed to retain counsel of choice, see 109 S.Ct. at 2661-65, the Court addressed the question whether the restraining order violated either "[Monsanto's] right to counsel of choice as protected by the Sixth Amendment or the Due Process Clause of the Fifth Amendment." 109 S.Ct. at 2665. Relying on another decision announced the same day, Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646, 2651-2657, 105 L.Ed.2d 528 (1989), the Court concluded that "neither of the Fifth or Sixth Amendments to the Constitution requires Congress to permit a defendant to use assets adjudged to be forfeitable to pay that defendant's legal fees." Monsanto III, 109 S.Ct. at 2666.

In Caplin & Drysdale, the Court said: "[T]here is a strong governmental interest in obtaining full recovery of all forfeitable assets, an interest that overrides any Sixth Amendment interest in permitting criminals to use assets adjudged forfeitable." 109 S.Ct. at 2655. The Court also refused to invalidate the forfeiture statute on the asserted ground that it upsets "the 'balance of forces between the accused and his accuser' " required by the fifth amendment, id., 109 S.Ct. at 2656 (quoting Wardius v. Oregon, 412 U.S. 470, 474, 93 S.Ct. 2208, 2212, 37 L.Ed.2d 82 (1973)), noting that "while '[t]he Constitution guarantees a fair trial through the Due Process Clauses ... it defines the basic elements of a fair trial largely through the several provisions of the Sixth Amendment....' " Id. (quoting Strickland v. Washington, 466 U.S. 668, 684-85, 104 S.Ct. 2052, 2063, 80 L.Ed.2d 674 (1984)). Finally, addressing the contention that the forfeiture power provided by section 853 could result in prosecutorial abuse, the Court said:

The Constitution does not forbid the imposition of an otherwise permissible criminal sanction, such as forfeiture, merely because in some cases prosecutors may abuse the processes available to them, e.g., by attempting to impose them on persons who should not be subjected to that punishment. Cases involving particular abuses can be dealt with individually by the lower courts, when (and if) any such cases arise.

109 S.Ct. at 2657 (citation omitted).

Because the attorneys' challenge to forfeiture in Caplin & Drysdale occurred following their client's guilty plea, however, the specific issue of pretrial restraint of assets in anticipation of post-trial forfeiture was not addressed in that case. The Monsanto III opinion, therefore, after relying upon Caplin & Drysdale for the general proposition that assets needed to pay counsel of choice may nonetheless be constitutionally subjected to forfeiture, proceeded to address Monsanto's contention that "freezing the assets in question before he is convicted--and before they are finally adjudged to be forfeitable--raises distinct constitutional concerns." Monsanto III, 109 S.Ct. at 2666. The Court concluded that "assets in a defendant's possession may be restrained in the way they were here based on a finding of probable cause to believe that the assets are forfeitable." Id.

The Court declined, however, to address the procedural aspects of such a pretrial restraint of property, stating:

We do not consider today ... whether the Due...

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