US v. Eleven Vehicles

• Decision Date: 05 September 1995
• Docket Number: Civ. A. No. 91-6779.
• Parties: UNITED STATES of America, Plaintiff, v. ELEVEN VEHICLES, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

898 F. Supp. 1143

UNITED STATES of America, Plaintiff, v. ELEVEN VEHICLES, et al., Defendants.

Civ. A. No. 91-6779.

United States District Court, E.D. Pennsylvania.

September 5, 1995.

COPYRIGHT MATERIAL OMITTED

Pamela Foa, Assistant U.S. Attorney, Michael M. Baylson, Sonia C. Jaipaul, U.S. Attorney's Office, Philadelphia, PA, for U.S.

Charles H. Ivy, Scoggins, Ivy & Goodman, P.C., Atlanta, GA, for Robert Clyde Ivy, Irene Ivy.

Robert Clyde Ivy, Lancaster, PA, pro se.

Wayne K. Radcliffe, Lancaster, PA, pro se.

Marilyn J. Gelb, Philadelphia, PA, for Wayne K. Radcliffe.

Bruce A. Franzel, Philadelphia, PA, for Terrance P. Faulds.

Terrance P. Faulds, Holtwood, PA, pro se.

Irene Ivy, Lancaster, PA, pro se.

Fred D. Furman, Kleinbard, Bell & Brecker, Philadelphia, PA, for Kleinbard, Bell & Brecker.

James H. Foster, Mellon Bank, N.A., Harrisburg, PA, for Mellon Bank, N.A.

John H. Whitmoyer, Henry & Beaver, Lebanon, PA, for Lebanon Valley National Bank.

Mark E. Cedrone, Carroll & Cedrone, Philadelphia, PA, for Gerald Schuler.

Elaine K. Radcliffe, Lancaster, PA, pro se.

Michelle E. Radcliffe, Lancaster, PA, pro se.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

This case involves the forfeiture of personal property belonging to claimants Robert and Irene Ivy, husband and wife, as a result of claimant Robert Ivy's involvement with alleged money laundering activities. On November 18, 1988, Congress broadened the sweep of the federal money laundering statutes, permitting the civil forfeiture not only of "gross receipts" of money laundering activities but also of property "involved in" money laundering. Claimants have moved for summary judgment, asserting that forfeiture can only be affected by the impermissible retroactive application of the 1988 amendments. For the reasons that follow, the Court concludes that the 1988 amendments may not be applied retroactively to forfeit property acquired before their enactment, and therefore, all properties acquired by the claimants before November 1988 shall be released to claimants. However, because there is a genuine issue of material fact as to whether any acts of money laundering occurred subsequent to November 1988, all properties acquired by the claimants after that date shall continue to be held by the Government.

I.

The present case stems from the dealings between International Signal and Control Corporation ("ISC"), a United Kingdom corporation based in Lancaster, Pennsylvania, and Armaments Corporation of South Africa Ltd. ("ARMSCOR"), a South African corporation in the business of procuring and marketing weapon systems.¹ Established in 1968, ARMSCOR was owned and operated by the Republic of South Africa to satisfy that country's then abundant weapons appetite. ISC,² on the other hand, engaged in the design, manufacturing, sale, and brokering of medium to high technology weapon and radar systems, with its activities involving both domestic and international clients. Their operations led them to each other, thus purportedly consummating what the Government has termed as "a long-term conspiracy between ARMSCOR and ISC to break the arms embargo of South Africa."³United States v. Jasin, 1993 WL 259436 at *1 (E.D.Pa. July 7, 1993).

On October 31, 1991, a sixty-seven count criminal indictment was returned by a grand jury in the Eastern District of Pennsylvania, implicating ARMSCOR and various managers and officers of ISC for their involvement in the conspiracy and the concomitant illegal acts in furtherance of that conspiracy. See United States v. Armaments Corporation of South Africa, Ltd. et al., Crim.A. No. 91-602 (E.D.Pa.). In that indictment, nineteen defendants, including claimant Robert Ivy, were charged with, inter alia, conspiracy, securities fraud, wire fraud, tax evasion, money laundering, and violation of the Arms Export Control Act. That criminal proceeding is now pending in the Eastern District of Pennsylvania independent of the instant matter.

After the return of the criminal indictment, the Government initiated this forfeiture action, claiming that various properties owned by those indicted were subject to civil forfeiture. Among those properties considered forfeitable by the Government were various automobiles, a boat, accounts or shares in banks and other financial institutions, and one business. The Government averred in its complaint that forfeiture of those properties that had a connection with the commission of certain illegal acts was permitted under 18 U.S.C. § 981(a)(1)(A) and § 981(a)(1)(C). The pertinent language of those statutes provide as follows:

(a)(1) ... The following property is subject to forfeiture to the United States:

(A) Any property, real or personal, involved in a transaction or attempted transaction in violation ... of section 1956 or 1957 of this title, or any property-traceable to such property.

....

(C) Any property, real or personal, which constitutes or is derived from proceeds traceable to a violation ... of section ... 1343 of this title affecting a financial institution.

18 U.S.C.A. § 981(a)(1)(A), (C) (West Supp. 1995). Pursuant to these measures, the Government claimed that the illicit acts of money laundering and wire fraud that were engaged in by agents of ISC provided a basis for civil forfeiture of various properties owned by those indicted.⁴

Claimants Robert and Irene Ivy are involved in this civil forfeiture litigation because of Robert Ivy's longstanding affiliation with ISC.⁵ In response to the Government's civil forfeiture complaint, the claimants filed a motion for summary judgment, arguing that the Government lacked probable cause in establishing that the properties are the "proceeds" of the underlying crimes, that property in Irene Ivy's name could not be forfeited due to her "innocent owner" status,⁶ and that retroactive application of the 1988 amendments to § 981 violated the ex post facto clause. The Court agreed that as to certain of the defendant properties, the Government had failed to establish probable cause and ordered the properties released forthwith. United States v. Eleven Vehicles, 836 F.Supp. 1147 (E.D.Pa.1993). As to the remaining properties, the Court found probable cause to exist.⁷ The Court also concluded that the existence of a genuine issue of a material fact as to Irene Ivy's lack of knowledge of the illicit activities alleged in the complaint precluded the granting of summary judgment in her favor on the innocent owner defense. Finally, the Court found that application of the forfeiture statute to properties seized prior to enactment of the 1988 amendments did not violate the ex post facto clause.⁸

Claimants have now filed a second motion for summary judgment embracing a question posed by this Court in its memorandum opinion, that is, whether the application of the 1988 amendments to § 981(a)(1)(A) to the claimants' situation would result in an impermissible retroactive application of law.⁹ After response by the Government on the issue, this Court indicated that, before answering the question, it would await the Supreme Court's decision in Landgraf v. USI Film Products, ___ U.S. ___, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), where the issue of the standard that courts should apply when applying a law retrospectively was squarely presented. With the Supreme Court having now provided guidance in Landgraf, claimants have renewed their second motion for summary judgment, arguing that allowing the Government to forfeit the remaining defendant properties, consisting of two luxury automobiles, shares in investment funds, corporate stock, bank accounts, and a government savings bond, would be an improper retrospective application of law. The Court now turns to the issues presented.

II.

A.

In order to prevail on a motion for summary judgment, a moving party must establish that no genuine issues of material fact remain in dispute and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). An issue is "genuine" only if "there is evidence from which a reasonable trier of fact could find in favor of the nonmoving party, viewing the record as a whole in light of the evidentiary burden the law places on that party." United States v. 717 S. Woodward St., 2 F.3d 529, 532 (3d Cir.1993) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252-56, 106 S.Ct. 2505, 2512-14, 91 L.Ed.2d 202 (1986)). A factual dispute is "material" only if it might affect the outcome of the suit under governing law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d at 202.

When required to rule on a motion for summary judgment, the deciding court must view the evidence in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Mellon Bank Corp. v. First Union Real Estate Equity & Mortgage Invest., 951 F.2d 1399, 1404 (3d Cir.1991). The court must accept the nonmovant's allegations as true, and resolve conflicts in the nonmovant's favor. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992), cert. denied, ___ U.S. ___, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993). The moving party bears the burden of "showing— that is, pointing out to the district court—that there is an absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986) (quotes omitted). If the movant makes a showing that there is no genuine issue of material fact, the nonmoving party may not rest on its pleadings. In these circumstances, the non-moving party must go beyond the pleadings to "establish the existence of each element on which it bears the burden of proof." J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir.1990), cert. denied, 499 U.S. 921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991).

B.

1.

Section 981(a)(1)(A) of Title 18 grants the Government the authority to seize and...