United States v. Badalamenti, No. S.S. 84 Cr. 236 (PNL).

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtEphraim Margolin, Nicholas C. Arguimbau, San Francisco, Cal., for Ivan Fisher, Esq
PartiesUNITED STATES of America, v. BADALAMENTI, et al., Defendants. In re Subpoena Served on Ivan FISHER, Esq.
Docket NumberNo. S.S. 84 Cr. 236 (PNL).
Decision Date23 July 1985

614 F. Supp. 194

UNITED STATES of America,
v.
BADALAMENTI, et al., Defendants.

In re Subpoena Served on Ivan FISHER, Esq.

No. S.S. 84 Cr. 236 (PNL).

United States District Court, S.D. New York.

July 10, 1985.

As Amended July 23, 1985.


614 F. Supp. 195

Rudolph W. Giuliani, U.S. Atty. S.D.N.Y., New York City, for the U.S.; Richard A. Martin, Asst. U.S. Atty., New York City, of counsel.

Ephraim Margolin, Nicholas C. Arguimbau, San Francisco, Cal., for Ivan Fisher, Esq.

Herman Kaufman, Austin V. Campriello, Henry J. Steinglass, New York City, for amicus curiae New York State Bar Ass'n.

Friedman & Atherton, Boston, Mass., for amicus curiae Nat. Ass'n of Crim. Defense Lawyers; Rikki J. Klieman, Boston, Mass., of counsel.

AMENDED OPINION AND ORDER

LEVAL, District Judge.

Ivan Fisher, Esq., attorney for the defendant Salvatore Catalano, moves to quash a trial subpoena duces tecum served upon him under Rule 17(c) by the Government. Defendant Catalano joins in the motion. The motion also is supported by amicus briefs of the National Association of Criminal Defense Lawyers and the New York Criminal Bar Association.

The subpoena commands that Mr. Fisher "testify ... and produce ... all documents ... relating to" his fee arrangement with Catalano.1

The movants oppose the subpoena on numerous grounds including claims that it violates (i) Rule 17(c); (ii) the attorney-client privilege; (iii) the defendant's Sixth Amendment right to counsel; (iv) the defendant's privilege against self incrimination; (v) Mr. Fisher's privilege against self incrimination; and (vi) the defendant's right to redress a grievance under the First Amendment.

The Government argues that the subpoena violates none of the asserted privileges or rights and that it seeks proper evidence of Catalano's commission of the crimes charged by showing the element of "substantial income" derived from a "continuing criminal enterprise," ("CCE"), 21 U.S.C. § 848(b)(2)(B) and from a "pattern of racketeering activity" ("RICO"), 18 U.S.C. § 1962. The Government contends it has reason to believe that Mr. Fisher's fee is in the vicinity of $500,000 and that the evidence of Catalano's possession of such a sum to pay his attorney is proof of his revenues from narcotics trafficking. The Government has further asserted it may seek to seize those funds from Mr. Fisher under the provisions of the two statutes for forfeiture of the proceeds of such criminal activity, even after transfer to another person.

614 F. Supp. 196
21 U.S.C. § 853(a), (c) and (n)(1)-(7) and 18 U.S.C. § 1963(a), (c) and (m)(1)-(7)

The issue of possible forfeiture of the attorney's fees arises as to both trial evidence, by which the Government may seek "a special verdict of forfeiture," 18 U.S.C. § 1963(c), 21 U.S.C. § 853(c), and to post-trial proceedings disputing the attorney's right to exemption from such forfeiture as a "bona fide purchaser for value ... without cause to believe that the property was subject to forfeiture." 21 U.S.C. § 853(n)(6)(B) and 18 U.S.C. § 1963(m)(6)(B).

Forfeiture

In my view the Government's position as to the liability of Mr. Fisher's legal fee to forfeiture is not well taken and cannot serve as a basis to sustain the subpoena. I acknowledge that a literal reading of the two forfeiture statutes would seem to encompass the legal fee. But the liability to forfeiture of bona fide legal fees paid to the indicted defendant's trial attorney would raise such constitutional and ethical problems, I cannot conceive that this was intended by Congress, absent some indication in statute or legislative history. And if it had been intended, such application would in all likelihood violate the Sixth Amendment.

The two provisions enacted in the Comprehensive Forfeiture Act of 1984, Pub.L. No. 98-473, Title II, §§ 302, 303, 2301, 98 Stat. 2040, 2044, 2192, 2193, state that the "right, title, and interest in the property subject to forfeiture vests in the United States upon the commission of the act giving rise to forfeiture" and that "such property ... subsequently transfered to another person may be forfeited unless the transferee establishes ... that he is a bona fide purchaser for value ... who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture...." 18 U.S.C. § 1963(c), 21 U.S.C. § 853(c).

The statute is apparently intended to dissuade the commercial world from dealing with racketeers and traffickers, warning that one who accepts dirty money in payment for goods or services may forfeit it. To the jeweler, for example, the statute says "Don't sell diamonds to a racketeer. You may lose the proceeds."

No one is more on notice of likelihood that the money may come from such prohibited activity than the lawyer who is asked to represent the defendant in the trial of the indictment. If the statute applies to him, its message to him is "Do not represent this defendant or you will lose your fee." That being the kind of message lawyers are likely to take seriously, the defendant will find it difficult or impossible to secure representation. By the Sixth Amendment we guarantee the defendant the right of counsel, but by the forfeiture provisions of the RICO and CCE statute (if they apply to the fee of the defense attorney), we insure that no lawyer will accept the business. (I note in addition that the RICO and CCE indictments to which the forfeiture provisions apply are generally big cases requiring months to prepare and try, making it all the less likely that the attorney might take a chance on escaping forfeiture.)

That is only the beginning of the problems such construction of the statute would raise. A lawyer who was so foolish, ignorant, beholden or idealistic as to take the business would find himself in inevitable positions of conflict. His obligation to be well informed on the subject of his client's case would conflict with his interest in not learning facts that would endanger his fee by telling him his fee was the proceeds of illegal activity. If he made efforts to fight the forfeiture claiming he was "reasonably without cause to believe that the property was subject to forfeiture," the evidence on this issue would consist primarily of privileged matter confided to him by his client. He might furthermore be found to have accepted a contingent fee in a criminal case in violation of DR 2-106(C), since his retention of his fee would depend on gaining an acquittal in the client's trial. The statute would give attorneys a motive to negotiate a guilty plea that did not involve forfeiture,

614 F. Supp. 197
rather than fight the case expending valuable time and increasing the risk of incurring forfeiture

The question whether these statutes reach the defense attorney's fee was considered by the District Court for Colorado which, reviewing the scant legislative history and the rushed passage of the Comprehensive Forfeiture Act, concluded that the Act was not intended to, and did not, cover the attorney's bona fide fee for the defense of the criminal trial. United States v. Rogers, 602 F.Supp. 1332 (D.Colo.1985).

The question was considered again in this district in United States v. Payden, 605 F.Supp. 839, 849-850 n. 14 (S.D.N.Y. 1985), rev'd on other grounds, 767 F.2d 26 (2d Cir.1985). Judge Edelstein rejected the Colorado court's analysis. He reasoned that to exempt attorneys' fees from forfeiture would make lawyers conduits for the laundering of racketeering profits. He argued that if the statute was intended to prevent the racketeer from obtaining "a Rolls-Royce with the fruits of a crime, he cannot be permitted to obtain the services of the Rolls-Royce of attorneys from these same tainted funds," at 850 n. 14, noting (as I have above) that the defense attorney has clear notice that the funds may be the profits of illegal enterprise.

Although with great respect for the real concerns expressed by my colleague, I must agree with the Rogers court. Absent some supporting indication in the legislative history, I think it most doubtful that Congress can have intended by its broad language to cover a special application so clearly at odds with an accused defendant's constitutionally guaranteed right to have counsel to defend the charge.

Nothing of great value to the resolution has been cited from legislative history. The Rogers court found support for its position in the legislative history of a related bill, the Comprehensive Drug Penalty Act of 1984, which provides for restraining orders to protect the availability of property that may be subject to criminal forfeiture. The House Judiciary Committee Report stated, "Nothing in this section is intended to interfere with a person's Sixth Amendment right to counsel." H.R.Rep. No. 845, pt. 1, 98th Cong., 2d Sess. 19 n. 1 (1984).

The Payden opinion seeks to rebut this inference by the next sentence of the Report stating "The Committee ... does not resolve the conflict in District Court opinions on the use of restraining orders that impinge on a person's right to retain counsel in a criminal case." Payden reasons, "Congress intended, not to resolve the sixth amendment conflict through this legislation, but to leave the resolution of these issues to the courts." Payden, supra, at 849 n. 14.

In my view, the sentence noted in Payden addresses a different problem. It is the difficulty the accused may experience in hiring and paying a lawyer if the funds of the accused have been sequestered in anticipation of eventual forfeiture. It is true the accused whose money has been seized may have difficulty hiring paid counsel; on the other hand, he can make out an affidavit of indigency and...

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22 practice notes
  • U.S. v. Monsanto, No. 436
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • January 29, 1988
    ...644 F.Supp. 452 (S.D.N.Y.1985); United States v. Rogers, 602 F.Supp. 1332 (D.Colo.1985). Compare United States v. Badalamenti, 614 F.Supp. 194, 198 (S.D.N.Y.1985) (finding that Congress did not intend post-conviction forfeiture of fees already paid to an attorney, but indicating that pre-tr......
  • U.S. v. Monsanto, No. 436
    • United States
    • U.S. Court of Appeals — Second Circuit
    • July 1, 1988
    ...of interest and ethical dilemmas for the defense attorney that jeopardize the right to due process. See United States v. Badalamenti, 614 F.Supp. 194, 196-97 (S.D.N.Y.1985). See also Note, Attorney Fee Forfeiture, 86 Colum.L.Rev. 1021, 1030-36 In addition, pretrial forfeiture, especially wh......
  • U.S. v. Nichols, Nos. 87-1459
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • March 10, 1988
    ...v. Figueroa, 645 F.Supp. 453 (W.D.Pa.1986); United States v. Ianniello, 644 F.Supp. 452 (S.D.N.Y.1985); United States v. Badalamenti, 614 F.Supp. 194 (S.D.N.Y.1985); United States v. Rogers, 602 F.Supp. 1332 (D.Col.1985); see also United States v. Thier, 801 F.2d 1463, 1474 (5th Cir.1986), ......
  • U.S. v. Moya-Gomez, MOYA-GOMEZ
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 30, 1988
    ...he has the right to have counsel appointed. See United States v. Ray, 731 F.2d 1361,1366 (9th Cir.1984); United States v. Badalamenti, 614 F.Supp. 194, 197 (S.D.N.Y.1985). Appointed counsel must, of course, be competent in the constitutional sense. See Strickland v. Washington, 466 U.S. 668......
  • Request a trial to view additional results
22 cases
  • U.S. v. Monsanto, No. 436
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • January 29, 1988
    ...644 F.Supp. 452 (S.D.N.Y.1985); United States v. Rogers, 602 F.Supp. 1332 (D.Colo.1985). Compare United States v. Badalamenti, 614 F.Supp. 194, 198 (S.D.N.Y.1985) (finding that Congress did not intend post-conviction forfeiture of fees already paid to an attorney, but indicating that pre-tr......
  • U.S. v. Monsanto, No. 436
    • United States
    • U.S. Court of Appeals — Second Circuit
    • July 1, 1988
    ...of interest and ethical dilemmas for the defense attorney that jeopardize the right to due process. See United States v. Badalamenti, 614 F.Supp. 194, 196-97 (S.D.N.Y.1985). See also Note, Attorney Fee Forfeiture, 86 Colum.L.Rev. 1021, 1030-36 In addition, pretrial forfeiture, especially wh......
  • U.S. v. Nichols, Nos. 87-1459
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • March 10, 1988
    ...v. Figueroa, 645 F.Supp. 453 (W.D.Pa.1986); United States v. Ianniello, 644 F.Supp. 452 (S.D.N.Y.1985); United States v. Badalamenti, 614 F.Supp. 194 (S.D.N.Y.1985); United States v. Rogers, 602 F.Supp. 1332 (D.Col.1985); see also United States v. Thier, 801 F.2d 1463, 1474 (5th Cir.1986), ......
  • U.S. v. Moya-Gomez, MOYA-GOMEZ
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 30, 1988
    ...he has the right to have counsel appointed. See United States v. Ray, 731 F.2d 1361,1366 (9th Cir.1984); United States v. Badalamenti, 614 F.Supp. 194, 197 (S.D.N.Y.1985). Appointed counsel must, of course, be competent in the constitutional sense. See Strickland v. Washington, 466 U.S. 668......
  • Request a trial to view additional results
1 books & journal articles
  • Fighting for Fees-Drug Trafficking and the Forfeiture of Attorney's Fees
    • United States
    • Journal of Drug Issues Nbr. 18-3, July 1988
    • July 1, 1988
    ...legitimate institutions.NOTES1. Againstthegovernment: U.S. v.Rogers, 602 F. Supp. 1332 (D. Colo. 1985); U.S. v.Badalamenti, 614 F. Supp. 194 (S.D.N.Y., 1985); U.S. v. Ianniello, S85 Crim 115 (CBM)(S.D.N.Y., Sept. 4, 1985); U.S. v. Reckmeyer, 631 F. Supp.1191(E.D. Va., 1986); U.S. v.Bassett,......

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