United States v. Nichols, No. 86 CR-0146J.

CourtUnited States District Courts. 10th Circuit. United States District Court of Utah
Writing for the CourtFred Metos, Salt Lake City, Utah, for defendant Nichols
Citation654 F. Supp. 1541
Decision Date02 March 1987
Docket NumberNo. 86 CR-0146J.
PartiesUNITED STATES of America, Plaintiff, v. Scott L. NICHOLS, et al., Defendants.

654 F. Supp. 1541

UNITED STATES of America, Plaintiff,
v.
Scott L. NICHOLS, et al., Defendants.

No. 86 CR-0146J.

United States District Court, D. Utah, C.D.

March 2, 1987.


654 F. Supp. 1542
COPYRIGHT MATERIAL OMITTED
654 F. Supp. 1543
Wayne T. Dance, Asst. U.S. Atty., Salt Lake City, Utah, Katherine Volz, Asst. U.S. Atty., Narcotics & Dangerous Drugs, Washington, D.C., for plaintiff

Fred Metos, Salt Lake City, Utah, for defendant Nichols.

Jerome H. Mooney, Salt Lake City, Utah, for defendant Bouck.

John O'Connell, Salt Lake City, Utah, for defendant Barnett.

Kenneth Brown, Salt Lake City, Utah, for defendant Day.

Colin P. King, Salt Lake City, Utah, for defendant Hoffman.

Stephen J. Eisenberg, Madison, Wis., for Palomino.

Gilbert Athay, Salt Lake City, Utah, for defendant Shayne.

Stephen McCaughey, Salt Lake City, Utah, for defendant C. Taylor.

Walter Bugden, Salt Lake City, Utah, for defendant Stephens.

Thomas Mitchell, Salt Lake City, Utah, for defendant Bobo.

Jerold McPhee, Salt Lake City, Utah, for defendant Reynolds.

Pat Brian, Salt Lake City, Utah, for defendant West.

Douglas E. Wahlquist, Salt Lake City, Utah, for defendant Hunt.

Louis Casuso, Miami, Fla., for defendant Penaloza.

Solomon Chacon, Salt Lake City, Utah, for defendant Lema.

Kristine Smith, Salt Lake City, Utah, for defendant Mackelprang.

Mark Bessendorfer, Midvale, Utah, for defendant Valgardson.

Mary C. Corporan, Salt Lake City, Utah, for defendant C. Fenton.

John T. Caine, Ogden, Utah, for defendant S. Taylor.

Peter Stirba, Salt Lake City, Utah, for defendant Duke.

Joseph Fratto, Jr., Salt Lake City, Utah, for defendant Montoya.

David Bown, Salt Lake City, Utah, for defendant Don Fenton.

Kevin Kurumada, Salt Lake City, Utah, for defendant Fisher.

Robert Archuleta, Salt Lake City, Utah, for defendant Cordano.

Larry Keller, Salt Lake City, Utah, for defendant Feltman.

MEMORANDUM OPINION AND ORDER

JENKINS, Chief Judge.

In October 1986, a federal grand jury indicted twenty-six defendants with conspiring to distribute controlled substances in violation of section 841(a)(1) of title 21 of the United States Code. In addition to the conspiracy charge (count I), defendants are charged individually with various substantive counts, including possession or distribution of cocaine, among others. Two defendants also are charged with engaging in a continuing criminal enterprise (CCE) in violation of 21 U.S.C. § 848. A superseding indictment repeats these charges and adds two more defendants.1 The criminal prosecution on the substantive offenses currently is proceeding against eight defendants. Other defendants either have entered pleas or have been dismissed.

654 F. Supp. 1544

The indictment includes a forfeiture provision pursuant to 21 U.S.C. § 853 (Supp. III 1985). Paragraph 1 of the forfeiture provision states:

Upon conviction of any violation of these laws, such convicted defendant shall forfeit to the United States (1) any property constituting or derived from any proceeds said defendant obtained, directly or indirectly, as the result of such violation, and (2) any of said defendant's property used or intended to be used, in any manner or part, to commit or to facilitate the commission of such violation, pursuant to Title 21, United States Code, Section 853.

In addition to this general, all-encompassing provision, for defendants Nichols and Palomino (who are charged with engaging in a continuing criminal enterprise), paragraph 1 also seeks forfeiture of any of their "interest in, claims against and property or contractual rights affording a source of control over the continuing criminal enterprise." Finally, paragraph 3 states that "such forfeiture shall include but not be limited to" certain specific property, including Nichols' interest in a $100,000 certificate of deposit and $21,300 cash seized from Palomino's residence in Florida. (Emphasis added).

Consistent with the forfeiture provisions of the indictment and pursuant to 21 U.S.C. § 853(e), the magistrate entered a restraining order on November 7 prohibiting the defendants, their family members, attorneys, associates and others from "pledging, distributing, encumbering, or otherwise disposing of or removing from the jurisdiction of this Court" any property specified in paragraphs 1, 2 or 3 of the forfeiture provisions of the superseding indictment.

In order to pay attorneys' fees to defend against the criminal charges, several defendants have asked the court either to quash the restraining order or to exempt certain assets from its effect. The court initially heard argument on these motions on November 26. Further argument was heard at pre-trial on January 14. The motions of seven defendants are now before the court. Scott Nichols specifically requests exemption of his interest in a $100,000 certificate of deposit, # XX-XXX-XXX-XX, issued by the Broward Bank in Fort Lauderdale, Florida. Cory Day seeks the return of all automobiles, money or things of value seized from him pursuant to a search warrant on October 29, 1986, in an amount necessary to pay attorneys' fees. The specific property seized includes two automobiles, 20 coin envelopes with coins, eighteen foreign currency bills and cash in the sum of $2,803.52. Ronald Bouck similarly seeks return of seized property to pay attorneys' fees although he does not specify which property. Paragraph 3e of the forfeiture provision of the indictment specifically seeks forfeiture of $33,795 found in Bouck's residence on October 29, 1986. David Palomino asks the court to turn over the $21,300 seized from his residence in Florida. Gary Barnett also asks this court to quash or modify the restraining order.2 Kevin Hoffman, who has appointed counsel, requests either the turnover or sale of some or all of the property seized from him on October 29. Hoffman's property includes a 1983 Porsche 911 automobile, a 1983 Chevrolet van and various firearms. Gary Fisher, who has entered a plea of guilty in this case, has waived his interest in property seized from him except as there may be third-party claims, specifically a claim by his attorney for fees. His attorney therefore seeks exemption of the 1976 Mercedes Benz automobile to be used for attorneys' fees.

All defendants here argue that the majority of the courts that have considered the question of whether the forfeiture provisions include attorneys' fees have held that the statute does not reach legitimate attorneys' fees. Alternatively, some defendants argue that, if the statute allows forfeiture of fees paid to attorneys, it violates

654 F. Supp. 1545
the defendant's sixth amendment right to counsel

This case presents this issue in a variety of contexts. All defendants except Fisher seek relief from the pre-conviction restraining order, which prohibits the transfer of property prior to conviction. Thus, for these defendants, the question is whether, prior to conviction, potentially forfeitable property may be used to pay for defendants' attorneys. Hoffman and Palomino were appointed counsel under the Criminal Justice Act (CJA), 18 U.S.C. § 3006A.3 Hoffman's motion in particular raises the interesting question of whether his assets can be exempted to pay for appointed counsel. Finally, Fisher, who has entered a guilty plea, seeks to exempt certain property from forfeiture so that he can pay attorneys' fees. In no case is the government asking the attorney to turn over fees already paid. Thus the issue is whether the forfeiture provisions, including the entry of the restraining order, can prohibit a defendant from transferring property to his attorney either before he is found guilty or, in the case of Fisher, after the criminal proceedings against him have terminated favorably for the prosecution.

Because of the complexity of this issue and the important constitutional considerations, the court took under advisement all motions seeking exemption from the restraining order. After a review of the material submitted to the court and the pertinent authorities, this court concludes that the forfeiture provisions of 21 U.S.C. § 853 as they are applied to funds or property reasonably necessary for a defendant to pay attorneys' fees incurred in defending the substantive criminal charges, either before or after conviction, violate a defendant's sixth amendment amendment right to counsel of choice and are unconstitutional. This conclusion similarly applies to the civil forfeiture provisions of the Controlled Substances Act, 21 U.S.C. § 881, as they may be applied to restrict a defendant's ability to pay counsel of his choice in a related criminal trial. Under either section 853 or section 881 of Title 21, when a defendant has no other available assets, the government is not permitted to prohibit the transfer of property to a defendant's chosen attorney for the payment of reasonable fees either prior to trial or after the conclusion of the trial, even if the defendant is found guilty of the charges and the assets used or to be used to pay counsel are "tainted" by the defendants' illegal activities.

THE STATUTE

In 1984, Congress passed the Comprehensive Crime Control Act of 1984, Pub.L. No. 98-473, 98 Stat. 1837 (1984), amending the Comprehensive Drug Abuse Prevention and Control Act of 1970, (popularly known as the "Controlled Substances Act" or "Drug Control Act") and the Organized Crime Control Act of 1970 or the Racketeer Influenced and Corrupt Organizations (RICO). Of concern here is that portion of the amendment that makes the forfeiture provisions applicable to all felonies under the Drug Control Act ("the Act"). 21 U.S.C. § 853 (Supp. III 1985).4

Section 853 provides that persons convicted of crimes under the Act forfeit "any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as a result of such violation" or

654 F. Supp. 1546
any property used to commit or facilitate the commission of a violation under the...

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9 practice notes
  • U.S. v. Monsanto, No. 436
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 29 Enero 1988
    ...is outweighed by the defendant's interest in using his property to retain counsel. Harvey, 814 F.2d at 924; United States v. Nichols, 654 F.Supp. 1541, 1558 (D.Utah 1987). We disagree with the reasoning and the results of those First, we think that both Harvey and Nichols undervalue the gov......
  • U.S. v. Nichols, Nos. 87-1459
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • 10 Marzo 1988
    ...on March 2, 1987. On the same day, the district court issued an opinion ruling on the appellees' motions. United States v. Nichols, 654 F.Supp. 1541 (D.Utah 1987). On statutory grounds, the court held that the criminal forfeiture provisions of the 1984 act do not exclude from forfeiture ass......
  • US v. Millan-Colon, No. S9 91 Cr. 685 (SWK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 8 Octubre 1993
    ...i.e., that the government ought not to simultaneously conduct civil and criminal forfeiture proceedings. In United States v. Nichols, 654 F.Supp. 1541 (D.Utah 1987) ("Nichols"), rev'd on other grounds, 841 F.2d 1485 (10th Cir.1988), defendants, charged with conspiring to distribut......
  • Kuriansky v. Bed-Stuy Health Care Corp., BED-STUY
    • United States
    • New York Supreme Court Appellate Division
    • 16 Febrero 1988
    ...The right to counsel does not guarantee that every defendant will have the lawyer he desires" (but see, United States v. Nichols, 654 F.Supp. 1541, 1558 [D.C.Utah 1987] ). By contrast, the Second Circuit recently held that the indictment alone was insufficient to support forfeiture of ......
  • Request a trial to view additional results
9 cases
  • U.S. v. Monsanto, No. 436
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • 29 Enero 1988
    ...is outweighed by the defendant's interest in using his property to retain counsel. Harvey, 814 F.2d at 924; United States v. Nichols, 654 F.Supp. 1541, 1558 (D.Utah 1987). We disagree with the reasoning and the results of those First, we think that both Harvey and Nichols undervalue the gov......
  • U.S. v. Nichols, Nos. 87-1459
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • 10 Marzo 1988
    ...on March 2, 1987. On the same day, the district court issued an opinion ruling on the appellees' motions. United States v. Nichols, 654 F.Supp. 1541 (D.Utah 1987). On statutory grounds, the court held that the criminal forfeiture provisions of the 1984 act do not exclude from forfeiture ass......
  • US v. Millan-Colon, No. S9 91 Cr. 685 (SWK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 8 Octubre 1993
    ...i.e., that the government ought not to simultaneously conduct civil and criminal forfeiture proceedings. In United States v. Nichols, 654 F.Supp. 1541 (D.Utah 1987) ("Nichols"), rev'd on other grounds, 841 F.2d 1485 (10th Cir.1988), defendants, charged with conspiring to distribute controll......
  • Kuriansky v. Bed-Stuy Health Care Corp., BED-STUY
    • United States
    • New York Supreme Court Appellate Division
    • 16 Febrero 1988
    ...The right to counsel does not guarantee that every defendant will have the lawyer he desires" (but see, United States v. Nichols, 654 F.Supp. 1541, 1558 [D.C.Utah 1987] ). By contrast, the Second Circuit recently held that the indictment alone was insufficient to support forfeiture of asset......
  • Request a trial to view additional results

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