United States v. Veliotis

• Decision Date: 25 May 1984
• Docket Number: No. 83 Crim. 551 (WCC).,83 Crim. 551 (WCC).
• Citation: 586 F. Supp. 1512
• Parties: UNITED STATES of America v. P. Takis VELIOTIS, James H. Gilliland, George G. Davis and Gerald E. Lee, Defendants.
• Court: U.S. District Court — Southern District of New York

586 F. Supp. 1512

UNITED STATES of America v. P. Takis VELIOTIS, James H. Gilliland, George G. Davis and Gerald E. Lee, Defendants.

No. 83 Crim. 551 (WCC).

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

May 25, 1984.

William M. Tendy, Acting U.S. Atty., S.D.N.Y., New York City, for U.S.; David W. Denton, Asst. U.S. Atty., New York City, of counsel.

Anderson, Russell, Kill & Olick, P.C., New York City, for defendant, P. Takis Veliotis; John H. Gross, Randy Paar, New York City, Deborah A. Swindells, Washington, D.C., of counsel.

OPINION AND ORDER

CONNER, District Judge:

P. Takis Veliotis ("Veliotis") and three co-defendants were charged in a seventeen-count indictment with various offenses arising out of an alleged kickback scheme, including conspiracy to violate 18 U.S.C. § 1962(c) of the Racketeer Influenced and Corrupt Organizations ("RICO") statute, 18 U.S.C. §§ 1961 et seq. Veliotis fled the jurisdiction before the indictment was filed, and currently remains a fugitive from justice. Appearing through his attorney, Veliotis seeks removal of an ex parte restraining order which prohibits him from selling or otherwise disposing of his stock in General Dynamics Corporation ("General Dynamics"). The restraining order was entered upon representations by the Government that the stock would be subject to forfeiture as a penalty under 18 U.S.C. § 1963(a)(2) if Veliotis is ultimately convicted of the underlying RICO violation. For the reasons set forth below, I reserve ruling on whether to continue the restraining order pending a hearing at which the Government will have to demonstrate that the stock in question bears sufficient relation to the alleged illegal transactions to make it a potential subject of forfeiture under § 1963 if Veliotis is convicted.

BACKGROUND

General Dynamics is a publicly-held corporation. Two of its divisions, the Quincy Division ("Quincy") and the Electric Boat Division ("Electric Boat") engage in ship construction. According to the indictment filed in this case, defendant Veliotis was a high-ranking officer and member of the Board of Directors of General Dynamics during the period between January 1973 and June 1982. He was also the President and General Manager of Quincy and the General Manager of Electric Boat.

The indictment, which was filed on September 6, 1983, accuses Veliotis and defendant James Gilliland, another high-ranking employee of General Dynamics, of having secured kickbacks in exchange for awarding subcontracts for work on commercial vessels and submarines to Frigitemp Corporation ("Frigitemp") and IDT Corporation ("IDT"), entities allegedly controlled by defendants George Davis and Gerald Lee. Count Two of the indictment, the portion relevant here, charges that the four men conspired to violate 18 U.S.C. § 1962(c) by conducting the affairs of an enterprise through a pattern of racketeering activity that included mail fraud, wire fraud, interstate transportation of stolen property and bankruptcy fraud. The enterprise itself is alleged to consist of "defendants Veliotis, Gilliland, Davis and Lee, together with Frigitemp, IDT, various entities purportedly created for the purpose of laundering embezzled funds, and ... other persons and entities known and unknown." Indictment at ¶ 38. The indictment does not name General Dynamics as a participant in the enterprise.

The indictment also contains a forfeiture provision which states that the defendants

did utilize their interests in, security of claims against, and property and contractual rights of various kinds in the business listed below including General Dynamics to afford themselves a source of influence over the Enterprise, ..., thereby making all their respective interests in the following entities, together with the proceeds derived therefrom, subject to forfeiture, pursuant to Title 18, United States Code, section 1963(a)(2).

Two days after the indictment was filed, the Government made an ex parte application to Judge Stewart of this Court, pursuant to 18 U.S.C. § 1963(b), to restrain General Dynamics, its employees and agents from disposing of Veliotis's stock in the corporation without prior approval of the court. The Government submitted a supporting affidavit, reciting that the indictment provided for forfeiture of the defendant's interests in various named entities including General Dynamics, that Veliotis had acquired a substantial number of shares of the stock as a result of his employment during the period the conspiracy continued, and that he had recently been disposing of those shares. The Government asserted that it would be "entitled as a matter of law to mandatory forfeiture of certain assets in the event the charges prove well founded," and that it was therefore appropriate for the Government to be protected against nullification of the forfeiture remedy, Affidavit of David W. Denton, Assistant United States Attorney. Judge Stewart complied with the Government's request and entered the restraining order.

Veliotis now asks the Court to lift the restraining order on grounds that, as a matter of law, the stocks will not be forfeitable if he is convicted. He argues, alternatively, that the Due Process Clause mandates that he be provided with a prompt post-seizure hearing at which the Government would have to demonstrate that the stocks are forfeitable. The Government vigorously urges the Court to decline to entertain defendant's motion on grounds that Veliotis has refused to submit to the Court's jurisdiction, and argues that even if Veliotis were present, compliance with the strictures of due process would not require that he be given a hearing prior to trial.

DISCUSSION

I. Veliotis's Fugitive Status

The threshold issue to be addressed is whether the Court should decline to entertain Veliotis's motion on grounds that by fleeing, he has manifested his unwillingness to submit to the Court's jurisdiction for complete resolution of the charges against him and he therefore should not be permitted to enlist the Court's aid to achieve his own ends. Both parties concede that this matter resides within the sound discretion of the Court.

In urging the Court to decline hearing the merits, the Government relies on a line of cases deriving from Molinaro v. New Jersey, 396 U.S. 365, 90 S.Ct. 498, 24 L.Ed.2d 586 (1970). In Molinaro, the defendant appealed his state conviction to the United States Supreme Court and, during the pendency of the appeal, he escaped from custody. The Court dismissed the appeal, stating:

No persuasive reason exists why this Court should proceed to adjudicate the merits of a criminal case after the convicted defendant who has sought review escapes from the restraints upon him pursuant to the conviction. While such an escape does not strip the case of its character as an adjudicable case or controversy, we believe it disentitles the defendant to call upon the resources of the Court for determination of his claims.

Id. at 366, 90 S.Ct. at 498-499. Subsequent cases have firmly established the propriety of dismissing the appeals of fugitive defendants, see, e.g., Estelle v. Dorrough, 420 U.S. 534, 95 S.Ct. 1173, 43 L.Ed.2d 377 (1975); United States v. Sotomayor, 592 F.2d 1219 (2d Cir.), cert. denied, 442 U.S. 919, 99 S.Ct. 2842, 61 L.Ed.2d 286 (1979); United States v. Stanzione, 391 F.Supp. 1201 (S.D.N.Y.1975), and this approach advances legitimate policies. Nonetheless, courts have departed from the Molinaro approach under certain circumstances, displaying a greater receptiveness to the claims of fugitives. Some of these cases have particular relevance to the facts at hand.

Among the factors considered significant by various courts wrestling with the problem of fugitive defendants is the presence or absence of a claim of right guaranteed by the Constitution, as opposed to an entitlement that is statutorily created. In United States v. Holmes, 680 F.2d 1372 (11th Cir.1982), for example, where the defendant was held to have abandoned his appeal by fleeing, the court observed:

The right of appeal is purely a creature of statute, 28 U.S.C. § 1291, and is not guaranteed by the Constitution. It may be waived by not filing a timely notice as required by the Federal Rules of Appellate Procedure or by abandonment through flight ....

Id. at 1373-74 (citation omitted). This emphasis also finds support in the language of Estelle v. Dorrough, supra. In rejecting an equal protection challenge to a state statute providing for automatic dismissal of pending appeals by escaped felons, the Supreme Court observed that "there is no federal constitutional right to state appellate review of state criminal convictions." Id. 420 U.S. at 536, 95 S.Ct. at 1175.

Veliotis has asserted that the Government has violated rights guaranteed him by the Due Process Clause and the Eighth Amendment. He has not suggested that the constitutional nature of his claim requires that the Court entertain the merits, and therefore I need not address that question. However, I am convinced that where a fugitive defendant seeks to vindicate a right vouchsafed by the United States Constitution, the Court should give weight to this factor in determining how to exercise its discretion.

Various courts departing from the Molinaro approach have suggested that the primary concern underlying Molinaro is one of mutuality. In other words, a court should decline to entertain the appeal of an escaped prisoner because it would allow him to benefit from a favorable result without risking the normal consequences of an adverse decision. See, e.g., Williams v. Holbrook, 691 F.2d 3, 14 (1st Cir.1982); United States v. Shapiro, 391 F.Supp. 689, 693 (S.D.N.Y.1975); see also Smith v. United States, 94 U.S. 97, 24 L.Ed. 32 (1876) ("It is clearly within our discretion to refuse to hear a criminal case in error, unless the convicted party ... is where he can be made to respond to any judgment we render"); Johnson v. Laird, 432 F.2d 77, 79 (9th Cir.1970...