United States v. Rivera
| Docket Number | 22-20552-Cr-GAYLES/TORRES |
| Decision Date | 06 July 2023 |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. DAVID RIVERA and ESTHER NUHFER, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
ORDER ON DEFENDANTS' JOINT MOTION FOR RELEASE OF LIS PENDENS ON SUBSTITUTE ASSETS
This matter is before the Court on David Rivera's (“Mr Rivera”) and Esther Nuhfer's (“Ms Nuhfer”) (collectively, “Defendants”) joint motion to dissolve the notices of lis pendens that the United States of America (the “Government”) recorded on Defendants' substitute assets in connection with these criminal proceedings. [D.E. 54]. The government filed a response to the motion on April 4, 2023, [D.E. 56] to which Defendants replied on May 30, 2023. [D.E. 68]. Therefore, Defendants' motion is now ripe for disposition.[1]After careful consideration of the motion response, relevant authority, and for the reasons discussed below, Defendants' motion is GRANTED.
In November 2022, a federal grand jury returned an indictment charging Defendants with multiple federal crimes. [D.E. 3]. The indictment alleges conspiracy to commit an offense against the United States in violation of 18 U.S.C. § 371, failure to register as foreign agents in violation of 22 U.S.C. §§ 612(a) and 618(a)(1), money laundering conspiracy under 18 U.S.C. § 1956(h), and engaging in transactions in criminally derived property in violation of 18 U.S.C. § 1957. These charges stem from Defendants' alleged involvement in a conspiracy to enrich themselves by engaging in undisclosed political activities in the United States on behalf of the government of Venezuela. Specifically, it is alleged that Mr. Rivera and Ms. Nuhfer engaged in lobbying efforts with U.S. politicians aimed at normalizing relations between the U.S. and Venezuela and preventing additional economic sanctions against President Maduro and his regime. In return for their lobbying efforts, Venezuelan agents purportedly compensated Defendants with tens of millions of dollars, which Defendants obtained through the execution of a consultancy agreement. The indictment specifies that the Government is seeking a judgment of at least $23,750,000 from the Defendants.
To satisfy this potential money judgment, the Government has identified several properties that are subject to forfeiture pursuant to 18 U.S.C. §§ 981(a) and 982(a) for being assets connected to Defendants' unlawful activity (“tainted assets”). Id. at 31 ¶ 4 (a)-(f).[2]Additionally, the indictment identifies eight parcels of Defendants' real property as “substitute property” for possible forfeiture if the tainted assets are unavailable upon conviction. Id. at 32-33. In December 2022, the United States recorded notices of lis pendens with the county clerks where the substitute properties are located, stating that “pursuant to 21 U.S.C. § 853(p) the United States may seek to forfeit the real property [described herein].” [D.E. 55-1].
The pending motion questions the propriety of the lis pendens that the Government has attached to the assets identified as substitute property in the indictment. In essence, Defendants submit that the Government has impermissibly exceeded the scope of its statutory authority by recording notices of lis pendens on these untainted properties, as neither state nor federal law grants it the authority to constrain innocent assets in this manner prior to trial and conviction. As we explain in more detail below, Defendants' objection is well taken.
Upon a defendant's conviction, federal law empowers the Government to confiscate, via forfeiture, all property associated with the defendant's criminal activity. Specifically, 21 U.S.C. § 853, the federal criminal forfeiture statute, provides for the forfeiture of two types of assets upon conviction. First, Section 853(a) authorizes the forfeiture of three categories of property directly linked to a defendant's offense of conviction (tainted property). These categories include:
21 U.S.C. § 853(a).
Second, if, after conviction, the tainted property has been depleted, its value diminished, or is otherwise beyond the government's reach, Section 853(p) separately provides for the forfeiture of “substitute property” (“untainted property”) up to the value of any property that would have been directly subject to forfeiture under Section 853(a). Unlike tainted property, substitute assets are not involved in or connected in any way to a defendant's alleged criminality.
Besides providing for the forfeiture of tainted property after a conviction, the statute also permits the imposition of pretrial restrictions of particular assets owned by the defendant. Specifically, upon motion by the government, Section 853(e)(1)(A) authorizes district courts to enter orders or take other necessary steps “to preserve the availability of property described in [Section 853(a)]” that “would, in the event of conviction, be subject to forfeiture.”
The authority to exert this power over a defendant's property prior to a conviction derives from the common law “tainted theory”, under which title to property involved in criminality is said to vest in the Government upon the commission of the criminal act, and which has been codified in § 853(c)'s so called “relation back” provision. See United States v. Kramer, No. 1:06CR200-ENV-CLP, 2006 WL 3545026, at *4 (E.D.N.Y. Dec. 8, 2006). Section 853's forfeiture scheme does not contain an analogous relation back provision applicable to untainted, or substitute, assets. See United States v. Parrett, 530 F.3d 422, 428-29 (6th Cir. 2008) (“Although the federal statute allows the [] government . . . ‘to preserve the availability' of tainted property, 21 U.S.C. § 853(e), the statute does not grant similar powers to the federal government with regard to substitute property”) (collecting cases).
“The purpose of a notice of lis pendens is to alert creditors, prospective purchasers and others to the fact that the title to a particular piece of real property is involved in litigation.” Sheehan v. Reinhardt ex rel. Est. of Warren, 988 So.2d 1289, 1290 (Fla. 2d DCA 2008) (quotes and citation omitted). The filing of a notice of lis pendens in Florida is governed by Florida Statutes § 48.23, which requires the proponent of the notice to show that the pending pleading “is founded on a duly recorded instrument or on a [valid] lien claim” over the property. Fla. Stat. § 48.23(3). This means that to support a notice of lis pendens on property, the pending lawsuit must reflect a “fair nexus between the apparent legal or equitable ownership of the property and the dispute embodied in the lawsuit.” Chiusolo v. Kennedy, 614 So.2d 491, 492 (Fla. 1993). This burden of proof is borne by the party seeking to record the notice of lis pendens. Id.
Conversely, “[a] complaint which will not support a claim against the specific property at issue cannot provide a basis for tying it up by a filing of notice of lis pendens.” Blue Star Palms, LLC v. LED Tr., LLC, 128 So.3d 36, 38 (Fla. 3d DCA 2012) (quotes and citation omitted). Indeed, Ross v. Breder, 528 So.2d 64, 65 (Fla. 3d DCA 1988) (quotes and citation omitted). Accordingly, “[w]hen the primary purpose of a lawsuit is to recover money damages and the action does not directly affect the title to or the right of possession of real property, the filing of a notice of lis pendens is not authorized.” DeGuzman v. Balsini, 930 So.2d 752, 755 (Fla. 5th DCA 2006). See also Ness Racquet Club, LLC v. Renzi Holdings, Inc., 959 So.2d 758, 761 (Fla. 3d DCA 2007) (“It is well settled that . . . when there is no ‘direct claim cognizable under the law against or upon the . . . property burdened by the lis pendens,' ‘no lis pendens may be asserted under any conditions against the realty[.]” (quoting Sunrise Point, Inc. v. Foss, 373 So.2d 438, 439 (Fla. 3d DCA 1979)).
Defendants' motion argues that the notices of lis pendens that the Government recorded on their substitute assets (i.e., property that the government concedes is not traceable, or connected in any way, to the pending lawsuit) should be lifted.[3] According to Defendants, the Government exceeded its authority because neither state nor federal law confers upon it a property interest over untainted assets to justify the imposition of lis pendens constrains prior to Defendants' trial. [D.E. 54 at 2-3]. Specifically, Defendants contend that, under Florida law, a notice of lis pendens is authorized only when the recording party shows that it has “an actual interest in the subject property at the time the action [ ] is filed.” Id. at 5. This interest, Defendants posit, must be substantial and tangible, going beyond a mere “potential and speculative future” claim over the property. Id. Indeed, Defendants rely on persuasive Florida state authority providing that, “[w]here the primary purpose of a lawsuit is to...
To continue reading
Request your trial