US v. $490,920 in US Currency, 95 Civ. 8743 (LAP).

• Decision Date: 16 January 1996
• Docket Number: No. 95 Civ. 8743 (LAP).,95 Civ. 8743 (LAP).
• Citation: 911 F. Supp. 720
• Parties: UNITED STATES of America, Plaintiff, v. $490,920 IN UNITED STATES CURRENCY, Defendant-in-rem.
• Court: U.S. District Court — Southern District of New York

911 F. Supp. 720

UNITED STATES of America, Plaintiff, v. $490,920 IN UNITED STATES CURRENCY, Defendant-in-rem.

No. 95 Civ. 8743 (LAP).

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

January 16, 1996.

Barbara A. Ward, Ellen Silverman Zimiles, Mary Jo White, U.S. Attorney, New York City, for U.S.

MEMORANDUM AND ORDER

PRESKA, District Judge:

Plaintiff United States of America ("Government") filed this action pursuant to 18 U.S.C. §§ 981 and 1955 seeking civil forfeiture of defendant-in-rem $490,920 in United States currency ("Funds"). In this regard, the Government has applied for a warrant to seize the Funds upon their return to Fernando Marquez ("Mr. Marquez") and PM Pinebrook, Inc. ("PM Pinebrook") (collectively, "Claimants"), the owners of the Funds, pursuant to a pending state court order. Claimants have moved to dismiss the complaint with prejudice based on the lack of in rem jurisdiction, or, alternatively, to deny the requested seizure warrant because of the absence of probable cause. Further, Claimants argue that they are entitled to recover interest on the Funds and their reasonable expenses, including attorney's fees. For the reasons that follow, I dismiss the complaint without prejudice due to the lack of in rem jurisdiction, and deny all other requested relief.

BACKGROUND

From 1992 until January 1995, the New York City Police Department ("NYPD") and the New York County District Attorney's Office ("D.A.'s Office") conducted a joint investigation of the illegal gambling activities of, inter alia, Robert Marquez, Raymond Marquez, and Peter Marquez. (Verified Complaint ("Compl.") ¶ 4.) Mr. Marquez is the father of Peter Marquez. (Id. ¶ 6.)

On January 12, 1995, based upon evidence obtained during this investigation, the NYPD and the D.A.'s Office applied for warrants to search sixty-nine locations. (Id. Exh. A ("January 12 Warrant").) Justice Franklin Weissberg of the Supreme Court of the State of New York, County of New York signed these warrants on the same day. (January 12 Warrant, at 159.) One of the locations to be searched was 484 Pinebrook Boulevard, New Rochelle, New York, the residence of Mr. Marquez and corporate residence of PM Pinebrook. (Id. ¶¶ 188-191.) Mr. Marquez is President and the sole shareholder of PM Pinebrook. (Memorandum in Support of Claimants' Motion to Dismiss ("Supp. Memo."), at 2.)

On January 13, 1995, while searching 484 Pinebrook Boulevard, NYPD Officer Patricia Tierney witnessed Mr. Marquez, as he sat on a couch, drop three small envelopes containing safety deposit keys behind the couch. (Compl., Exh. B ("January 16 Warrant") ¶ 6.) The NYPD also recovered bank safety deposit account statements for three safety deposit boxes, held in the name of PM Pinebrook, located in two branches of National Westminster Bank. (Id.) The keys which Mr. Marquez dropped behind the couch opened these three safety deposit boxes. (Compl. ¶ 7.) While this search was in progress, Peter Marquez arrived at 484 Pinebrook Boulevard and was arrested on gambling related charges. (Supp.Memo., at 3 n. 2.)

On January 16, 1995, Justice Cataldo of the New York City Criminal Court signed warrants, at the application of the NYPD and the D.A.'s Office, providing for the search of, inter alia, the three safety deposit boxes at National Westminster Bank. (January 16 Warrant, at 7-8.) During the execution of these warrants, the NYPD seized $240,920 in United States currency from one box and $250,000 in United States currency from another box. This currency comprises the Funds at issue in the instant forfeiture action. (Compl. ¶ 12.)

On February 22, 1995, at the request of the D.A.'s Office, the Federal Bureau of Investigation ("FBI") commenced administrative forfeiture proceedings against the Funds. (Affidavit of FBI Special Agent Scott Moritz in Support of Seizure In Rem Warrant ("Moritz Aff.") ¶ 16.) The FBI served notice of these proceedings on April 10, 1995, and Claimants filed a claim on May 10, 1995. (Id. ¶ 17.) Accordingly, on July 6, 1995, the FBI referred the matter to the United States Attorney's Office for the Southern District of New York for judicial forfeiture. (Id.) Also in July 1995, Peter Marquez and Robert Marquez were convicted of gambling violations under New York penal law.¹ (Compl. ¶ 9.)

On August 8, 1995, the D.A.'s Office filed a motion before Justice Weissberg for an order directing that

property seized and currently held in the custody of the office of the New York County District Attorney be made available for inspection by the Office of the United States Attorney for the Southern District, and where requested, seized property be turned over to the office of the United States Attorney for the Southern District.

(Supp.Memo., Exh. 8.) On August 23, 1995, Claimants filed a cross-motion seeking the return of their seized property, including the Funds. (Supp.Memo, Exh. 9.)

At an October 2, 1995 proceeding, attended by Claimants, the D.A.'s Office, and the Assistant United States Attorney ("AUSA"), Justice Weissberg denied the D.A.'s Office's motion and granted Claimants' cross-motion. (Moritz Aff., Exh. H, at 12-13.) Justice Weissberg repeatedly stated that absent another pending action, he had no authority under New York's statutory warrant and seizure scheme, see N.Y.Crim.Proc.Law §§ 690.05-690.55 (McKinney 1995), to order the Claimants' seized property turned over to federal authorities. (Moritz Aff., Exh. H.) In a written order dated October 11, 1995 ("October 11 Order"), Justice Weissberg reiterated his order denying the D.A.'s Office's motion in its entirety and granting Claimants' motion in its entirety. (Supp.Memo., Exh. 10.) In this regard, Justice Weissberg ordered that "the personal property of Claimants, Fernando Marquez and PM Pinebrook, Inc., including the contents of the safe deposit boxes ... be forthwith released, relinquished and returned to Claimants." (Id.)

On October 11, 1995, after the issuance of Justice Weissberg's October 11 Order, the D.A.'s Office, the AUSA and Claimants appeared once again before Justice Weissberg. The D.A.'s Office requested a stay from the October 11 Order as it related to the Funds. (Moritz Aff., Exh. I.) The D.A.'s Office argued that, as it allegedly indicated in its motion papers, it turned the Funds over to federal authorities in January 1995 when it requested the FBI to commence an adoptive forfeiture. (Id. at 3.) The D.A.'s Office further stated that the AUSA decided not to serve a subpoena duces tecum on the state court clerk for the Funds, as the AUSA indicated it would during the October 2, 1995 proceeding. (Id. at 4.) Justice Weissberg denied the D.A.'s Office's requested relief, citing his lack of authority to issue the turnover order. (Id.)

The D.A.'s Office and the Claimants appeared before Justice Weissberg for the last time on October 12, 1995. Justifiably disturbed by the lack of compliance with his October 11 Order, Justice Weissberg stated that he was "about to bring a contempt proceeding against the District Attorney's Office." (Moritz Aff., Exh. J, at 12.) Further, Justice Weissberg learned that the federal authorities served a subpoena duces tecum for the Funds on the state court clerk after the October 11, 1995 proceeding, despite the D.A.'s Office's suggestion to the contrary during that proceeding. (Moritz Aff., Exh. J.) Justice Weissberg discussed his disappointment with the fact that neither the D.A.'s Office nor the AUSA indicated to him during the October 11, 1995 proceeding that "the U.S. Attorney intended to file a subpoena in an attempt to thwart my order." (Id. at 13.) Justice Weissberg characterized this conduct as "a disgraceful misuse of prosecutorial powers." (Id. at 17.) Further, Justice Weissberg annulled the subpoena because the federal authorities served it in the wrong place and it lacked the requisite filing fee. (Id. at 12, 17.)

In this context, on October 13, 1995, with Justice Weissberg's October 11 Order pending and the United States Marshals Service in custody of the Funds, the AUSA filed the instant complaint seeking civil forfeiture of the Funds. (Moritz Aff. ¶ 24.) The clerk of this Court then issued, according to Rule C(3) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure, a warrant for the arrest of the Funds. (Id.)

On December 7, 1995, Claimants filed their Notice of Motion to dismiss the complaint with prejudice under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, to direct the return of the Funds to Claimants, with interest, and to direct that plaintiff pay Claimants their reasonable expenses, including attorney's fees. (Notice of Motion.)

Based on the Government's concern "about a possible defect in in rem jurisdiction arising out of the initial seizure of the defendant-in-rem currency by state authorities and its subsequent transfer to federal custody for forfeiture," it has moved "for a judicially-approved in rem seizure warrant for the defendant-in-rem currency." (Government's December 7, 1995 Letter Brief ("Government Brief"), at 2.)

If the Court issues the warrant, the Government would return the funds to the D.A.'s Office, which would return them to the Claimant, at which time the Government would execute the arrest warrant in rem. The Government submits that such a procedure is supported by precedent and would cure the potential defect in in rem jurisdiction in this case. The proposed procedure would also allow the D.A.'s Office to comply with the state court order directing the return of the funds. Although applications for seizure warrants are usually made ex parte, the Government has made the instant application on notice to Claimant because the Court's decision should also resolve the issues presented by the pending motion to dismiss.

(Id.)

As conceded by the Government at oral argument on December 20, 1995, neither the Government nor the D.A.'s Office has either appealed...