US v. All Funds on Deposit, CV-90-4117 (ADS).

• Decision Date: 17 June 1991
• Docket Number: No. CV-90-4117 (ADS).,CV-90-4117 (ADS).
• Citation: 767 F. Supp. 36
• Parties: UNITED STATES of America, Plaintiff, v. ALL FUNDS ON DEPOSIT IN ANY ACCOUNT AT CERTAIN FINANCIAL INSTITUTIONS HELD IN THE NAMES OF CERTAIN INDIVIDUALS, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

767 F. Supp. 36

UNITED STATES of America, Plaintiff, v. ALL FUNDS ON DEPOSIT IN ANY ACCOUNT AT CERTAIN FINANCIAL INSTITUTIONS HELD IN THE NAMES OF CERTAIN INDIVIDUALS, et al., Defendants.

No. CV-90-4117 (ADS).

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

June 17, 1991.

Andrew J. Maloney, U.S. Atty., E.D.N.Y. by Paul Weinstein, Asst. U.S. Atty., Brooklyn, N.Y., for U.S.

Goltzer & Adler, New York City (Charles D. Adler, of counsel), for claimant Francisco A. Murillo.

OPINION AND ORDER

SPATT, District Judge.

In United States v. Monsanto, 924 F.2d 1186 (2d Cir.1991) (en banc) ("Monsanto IV"), the Second Circuit held that in the context of a criminal forfeiture proceeding the Fifth and Sixth Amendments require an adversary, post-restraint, pretrial hearing as to probable cause to continue the restraint of assets needed to retain counsel of choice. Less than six months later, this Court is faced with the issue of whether the Monsanto IV safeguards are equally applicable in a civil forfeiture proceeding when the claimant is also the defendant in the related criminal action. For the reasons that follow, this Court is of the view that under the circumstances presented here, the rule enunciated in Monsanto IV applies equally in this case.

I. PRELIMINARY STATEMENT

Claimant Francisco A. Murillo ("Murillo"), moves pursuant to Rule 12 of the Admiralty Rules of the United States District Courts for the Southern and Eastern Districts of New York, as well as the Fifth and Sixth Amendments of the Constitution, for the release of $100,000 of funds previously attached by an ex parte order, so he can retain private counsel of his choice to defend him in the related ongoing criminal action.

The plaintiff United States of America ("the Government"), cross-moves pursuant to Fed.R.Civ.P. 56(a), for summary judgment, and also for a stay of this civil forfeiture proceeding pending a disposition of the criminal action, pursuant to 18 U.S.C. § 981(g) and 21 U.S.C. § 881(i). In addition, Murillo cross-moves to dismiss the action as to four of the six seized bank accounts, on the ground that they are located outside of the Eastern District of New York, and therefore the Court lacks subject matter jurisdiction over the res.

Oral argument was held by the Court on June 7, 1991 and June 14, 1991. On June 14, 1991, the Government waived any objection to the conceded untimeliness of Murillo's cross-motion to dismiss, relying solely on oral argument as to that issue.

II. FACTUAL BACKGROUND

By criminal complaint dated October 19, 1990, Murillo was charged in the Eastern District of New York (CR-90-1336-M) with knowingly and intentionally structuring financial transactions with a domestic financial institution (see 31 U.S.C. § 5324; 18 U.S.C. § 3551). Specifically, Murillo is charged with breaking down the amount of cash in excess of $10,000 and making cash deposits in the Bank of New York, Garden City, and other banks, such as Chemical Bank, of less than $10,000 with the purpose of causing the bank not to file a currency transaction report ("CTR") with respect to the deposits.

On or about May 16, 1991, a Grand Jury returned a 111-count indictment charging Murillo with conspiracy to illegally transfer funds out of the United States through structuring financial transactions to avoid CTR requirements in violation of 31 U.S.C. §§ 5313(a) and 5324(3). Murillo was arraigned by this Court on the indictment on June 7, 1991, entering a plea of not guilty.

In the interim, on December 3, 1990, the Government commenced this civil action pursuant to 18 U.S.C. § 981 and 31 U.S.C. § 5324, by filing a verified complaint in rem seeking the forfeiture of all funds contained in numerous bank accounts in the names of Murillo, his wife and his daughter. The Government alleges that these funds have been involved in or are the proceeds of Murillo's alleged criminal activities. On that same day, this Court issued, ex parte, a warrant for the arrest of the funds in rem, which attached all funds on deposit in the banks, including the following six accounts to which Murillo now asserts a claim:¹

(1) Chemical Bank, 52 Broadway, New York, New York, Account No. 06311264, in the name of Francisco and Minerva Murillo, in the amount of $7,780.51;²

(2) Chemical Bank, 52 Broadway, New York, New York, Account No. XXXXXXXXX, in the name of Francisco Murillo, in the amount of $8,409.87;

(3) Chemical Bank, 52 Broadway, New York, New York, Account No. XXXXXXXXX, in the name of Francisco and Minerva Murillo, in the amount of $17,442.87;

(4) Bank of New York, Stewart Avenue, Garden City, New York, Account No. XXXXXXXXX, in the name of Francisco Murillo, in the amount of $3,829.21;

(5) Long Island Savings Bank, 1150 Franklin Avenue, Garden City, New York, Account No. XXXXXXXXXXX, in the name of Francisco Murillo, in the amount of $10,575.34; and,

(6) Merrill Lynch, 2 Broadway, New York, New York, Account No. 84031253, in the name of Francisco and Minerva Murillo, in the amount of $290,731.20.

Murillo now seeks to have the restraining order vacated to the extent that he requests that $100,000 be released from the seizure to enable him to retain private counsel of his choice to defend the parallel criminal action.

III. DISCUSSION

As stated above, before the Court at this time are four motions: (1) Murillo's motion to dismiss as to four of the accounts for lack of subject matter jurisdiction; (2) The Government's motion for partial summary judgment; (3) Murillo's motion to have $100,000 of the seized funds released; and, (4) The Government's motion for a stay. Each of these motions is considered separately below.

(1) Murillo's Motion to Dismiss for Lack of Jurisdiction:

Murillo contends that since four of the six bank accounts seized are located in Manhattan, within the confines of the Southern District of New York, this Court lacks subject matter jurisdiction over the res with respect to those accounts. In support of his argument, Murillo relies on 28 U.S.C. § 1395(b), which provides as follows:

"(b) A civil proceeding for the forfeiture of property may be prosecuted in any district where such property is found" (emphasis supplied).

For the reasons that follow, the Court finds Murillo's argument to be without merit.

Pursuant to 28 U.S.C. § 1345, federal district courts have exclusive jurisdiction over all actions where the United States is a plaintiff. Furthermore, 28 U.S.C. § 1355 provides that original exclusive jurisdiction over all actions or proceedings for forfeiture rests with the district courts. Clearly, "subject matter" jurisdiction over the civil forfeiture of Murillo's bank accounts pursuant to 18 U.S.C. § 981 is proper in this Court.

The Court must next determine whether venue over the four accounts maintained in Manhattan is proper in this district. To make this determination, the Court turns to section 981(h) of Title 18 U.S.C., which specifically provides that,

"in addition to the venue provided for in section 1395 of title 28 or any other provision of law, in the case of property of a defendant charged with a violation that is the basis for forfeiture of the property under this section, a proceeding for forfeiture under this section may be brought in the judicial district in which the defendant owning such property is found or in the judicial district in which the criminal prosecution is brought" (emphasis supplied).

Section 981(h), therefore, expressly creates a specific alternative for venue of civil forfeiture proceedings in addition to the venue provisions of 28 U.S.C. § 1395, governing venue of civil proceedings to recover fines, penalties or forfeiture in general. This section explicitly contemplates venue of civil forfeiture proceedings in the judicial district where the parallel criminal action is prosecuted. As a practical matter, this avoids piecemeal forfeiture proceedings in district courts throughout the country where the criminal defendant owns or has an interest in property located outside of the district within which he or she is being criminally prosecuted.

Finally, the Court also notes that the venue provision relied upon by Murillo is couched in permissive terms—"a civil proceeding ... may be prosecuted in any district where such property is found"— and is not a mandatory direction. Accordingly, the Court finds that subject matter jurisdiction exists over this action and that venue of all six bank accounts is proper in the Eastern District of New York. As such, Murillo's motion to dismiss for lack of subject matter jurisdiction is denied.

(2) The Government's Motion for Partial Summary Judgment:

The Government moves for summary judgment pursuant to Fed.R.Civ.P. 56(a) as to the six bank accounts. Specifically, the Government alleges that these accounts were used in over one-hundred separate transactions allegedly structured so as to avoid currency transaction reporting requirements in violation of 31 U.S.C. § 5324.

To establish forfeitability under 18 U.S.C. § 981(a)(1)(A), the Government is required to demonstrate that "probable cause" exists for the forfeiture (see United States v. Banco Cafetero Panama, 797 F.2d 1154, 1160 2d Cir.1986), which entails a showing of "reasonable grounds, rising above the level of mere suspicion, to believe that certain property is subject to forfeiture" (United States v. Premises and Real Property at 4492 South Livonia Road, 889 F.2d 1258, 1267 2d Cir.1989). Once the Government establishes probable cause, the burden shifts to the claimant to prove that the factual predicates for forfeiture under the statute have not been met (see United States v. Premises and Real Property at 4492 South Livonia Road, supra, 889 F.2d at pp. 1267-68). Where the claimant fails to come forward with such evidence, "summary judgment may be granted for the government solely upon the basis of its showing of probable cause" (id. at p. 1267).

Upon a review of the submissions by the parties, the Court finds that...