Opinion
No. 04 Cr. 1109 (DLC)(KNF).
June 8, 2005
REPORT and RECOMMENDATION
TO THE HONORABLE DENISE L. COTE, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Before the Court is an application by the government that cash bail deposited to secure an appearance bond be forfeited and that a default judgment be entered against the defendant and the surety on his appearance bond for the full amount of the bond. The surety opposes the government's application and argues that equity warrants the court in denying that application.
II. BACKGROUND
Chuong Din Pham ("Pham") was arrested in September 2004 and charged with violating Title 18 U.S.C. § 1542, which makes it an offense for a person to make any false statement willfully and knowingly in an application for a passport with the intent to induce or secure the issuance of a passport under the authority of the United States. Thereafter, a United States magistrate judge, in accordance with Title 18 U.S.C. § 3142, fashioned bail conditions under which Pham might be released pending trial. They included, among other things, that Pham and one financially responsible person execute a $50,000 personal recognizance bond, that $2,000 be posted in support of the bond and that Pham restrict his travel to the Southern District of New York, the Eastern District of New York and the District of New Jersey. Pham was also placed under the supervision of the Pretrial Services Office for this judicial district.
On January 10, 2005, Pham's trial was scheduled to commence. The prosecutor appeared in the designated courtroom on that date as did Pham's defense counsel. However, Pham elected not to attend court on that date and has not returned to court since that time. As a result of Pham's failure to attend court on the date fixed for the commencement of his trial or on any date thereafter, the government has made an application, pursuant to Rule 46 of the Federal Rules of Criminal Procedure, for an order: 1) entering judgment by default against Pham and the surety on his bond, Christy Le ("Le"), for $50,000; and 2) forfeiting to the United States the $2,000 posted as security at the time that the appearance bond was executed by Pham and Le.
Le concedes through a written submission made to the Court "that there is no technical or statutory defense to the relief sought by the Government." Nevertheless, she opposes the application that has been made by the government. Le contends that the court should exercise the discretion vested in it by Fed.R.Civ.P. 46(f)(2) to set aside, in whole or in part, a bail forfeiture because, in the instant case, equity warrants the court in taking that action. Le explains that, in early August 2004, she became aware of Pham when she was contacted by a friend of her family who resides in Florida. Pham is acquainted with Le's family friend. Pham was described to Le as a person who was trustworthy and interested in working and learning a trade. Le, who owns and operates a nail-care business, met with Pham in mid-August 2004, and concluded that Pham was interested in learning to be a manicurist. Le agreed to train Pham in the nail-care business and to provide housing for him in her home. Pham worked at Le's nail-care establishment cleaning the facility and its utensils. Pham also polished customers' nails and processed their cash and credit card payments. In addition, Pham performed general maintenance duties at Le's home and assisted her by performing various chores and escorting her children to school when scheduling conflicts prevented Le from doing so.
In early September 2004, Pham was arrested for the charge noted above. Le determined to assist him. She borrowed money from friends and family members to post the cash component of Pham's bail and she co-signed his appearance bond. By signing the appearance bond, Le acknowledged, along with Pham, that they were "jointly and severally bound to pay to the United States of America the sum of $50,000" if Pham failed to abide by the conditions set forth on the face of the bond, under which he was released from custody pending a trial.
After Pham was released from custody, he continued to perform the domestic and workplace assignments for Le he had been performing prior to his arrest. However, according to Le, without her knowledge, Pham obtained "duplicate credit cards on Le's accounts" and obtained new credit card accounts in their joint names. Pham began using the credit cards to take excursions from New Jersey, where he worked and resided, to points beyond the geographical limits to which he was confined by the terms and conditions under which he was released from custody by a United States magistrate judge. In November 2004, Le learned that Pham had violated the terms and conditions under which he was released from custody when she received invoices from various credit card companies detailing Pham's travel activities. However, Le did not inform the court of Pham's misconduct; nor did she seek to withdraw as a surety on his appearance bond. By mid-November 2004, Le became aware, through a credit card invoice she received, that Pham had traveled to his native country, Vietnam, and had amassed thousands of dollars of debt using the credit cards noted above. Armed with information that Pham had fled the country, Le took no steps to: (a) inform the court of Pham's departure; or (b) terminate her role as a surety on Pham's appearance bond. Le traveled to Vietnam but was not able to locate Pham. The record before the Court does not indicate that Le provided any information she learned during her Vietnam visit to the government so that it might attempt to use its own resources to locate Pham and return him to this country.
Le's written submission to the Court, in opposition to the government's application, indicates that she would suffer great financial hardship if Pham's bail were forfeited and a default judgment were entered against her for the full amount of the bond. Le's written submission to the Court notes that she and her husband have been separated for several years, that she is raising two children aged 11 and 14 on her own and that she does not receive support from her husband. That document also contains financial data that Le contends demonstrates that: (i) the income she derives from her business is small — less than $20,000 during the calendar years 2003 and 2004; (ii) her total monthly income, as of December 31, 2004, is equal to her total monthly expenses; and (iii) her total assets as of January 31, 2005, $362,849, exceed her total liabilities by $54,573. Therefore, according to Le, an order directing that she forfeit the $2,000 she deposited as security for Pham's appearance bond and "the imposition of a judgment in the amount of $50,000 would wipe her out and likely result in the loss of her line of credit on which she relies to run her business."
The Court notes that the unsigned income tax returns submitted by Le, in support of her contention that equity warrants the court in denying the government's application, are income tax returns that were filed jointly by Le and her husband, although Le maintains that the couple has been "separated for several years." Furthermore, the income tax returns appear to indicate that Le's husband is her employee. Moreover, a "Monthly Budget" financial statement and a "Summary Balance Sheet" that were prepared by Le's accountant and are among the exhibits to the written submission Le made to the Court, are identified as the joint "Monthly Budget" for Le and her husband and their joint "Summary Balance Sheet." Both documents indicate that Le and her husband share the same residential address. It is the same residential address that appears on their joint income tax returns. No explanation has been provided to the Court for the accountant's determination to prepare a joint monthly budget for a couple that has been "separated for several years." According to the "Summary Balance Sheet," Le owns real estate valued at $348,000 on which a $246,000 mortgage exists. Therefore, she has equity of $102,000 in that property.
III. DISCUSSION
Fed.R.Crim.P. 46(f)(1) provides that a "court must declare the bail forfeited if a condition of the bond is breached." However, a "court may set aside in whole or in part a bail forfeiture upon any condition the court may impose if: (A) the surety later surrenders into custody the person released on the surety's appearance bond; or (B) it appears that justice does not require bail forfeiture." Fed.R.Crim.P. 46(f)(2). If a court does not set aside a bail forfeiture, it "must, upon the government's motion, enter a default judgment." Fed.R.Crim.P. 46(f)(3)(A). After a judgment has been entered pursuant to Fed.R. Crim P. 46(f)(3), a court "may remit in whole or in part the judgment under the same conditions specified in Rule 46(f)(2)." Fed.R.Crim.P. 46(f)(4).
By the express language of Fed.R.Crim.P. 46(f)(1), the court is duty-bound to declare Pham's bail forfeited, since he has violated conditions of his bond by: (i) failing to attend court on the date fixed for the commencement of his trial or on any date thereafter; and (ii) traveling beyond the geographic limits placed on him by a United States magistrate judge. As noted above, the court may set aside a bail forfeiture in whole or in part if the surety, in this case Le, surrenders into custody the person who has been released on bail conditions or if it appears to the court that justice does not require bail forfeiture.
As has been discussed earlier in this writing, Le advised the Court, through her written submission, that she traveled to Vietnam, but was not able to locate Pham. Therefore, she has not surrendered him into custody. Consequently, in order to have a bail forfeiture set aside, or before any default judgment that might be entered pursuant to Fed.R.Crim.P. 46(f)(3) can be remitted, Le must establish to the court's satisfaction that the interests of justice would be served by either action.
In determining whether to set aside a bail forfeiture or to remit, in whole or in part, a judgment that has been entered pursuant to Fed.R.Crim.P. 46(f)(3), courts typically consider five factors. Those factors are: (1) whether the criminal defendant's breach of the bond conditions was willful; (2) the cost, inconvenience and prejudice suffered by the government as a result of the breach; (3) any explanation or mitigating factors presented by the criminal defendant; (4) whether the surety has assisted in the apprehension of the criminal defendant; and (5) whether the surety is a professional or a friend or member of the criminal defendant's family. See United States v. Gambino, 17 F.3d 572, 574 (2d Cir. 1994). Each factor is addressed below. Willful Breach
In the case at bar, Pham's breach of the conditions of his bond occurred approximately two months before the date on which his trial was scheduled to begin. Pham obtained credit cards surreptitiously and traveled beyond the geographic limits placed on him by a United States magistrate judge, and recorded on the face of his appearance bond. Le, the surety on that appearance bond, learned of Pham's breach of the bond conditions but failed to alert the court of the breach or to withdraw as a surety on Pham's appearance bond. Both the manner in which Pham obtained the means to travel beyond the geographic limits placed on him and the absence from the record of any facts that indicate that Pham was coerced into traveling beyond the authorized zone support a conclusion that his breach of the bond conditions was willful.
Cost, Inconvenience and Prejudice
It is certain that the prosecution expended resources preparing for Pham's trial. Moreover, since it appears from the submissions made to the Court in connection with the instant application that Pham had been appointed counsel to represent him at his trial, the government incurred additional costs associated with the preparations Pham's counsel made to defend him at the trial which could not go forward due to Pham's determination to abscond. Since Pham remains "at large, the amount of delay caused by his violation [of his bond conditions] and, thereby, the prejudice to the government, is unknowable and potentially indefinite."United States v. Gallego, No. 02 CV 5987, 2003 WL 1193536, at *2 (E.D.N.Y. Jan. 29, 2003).
"The purpose of bond is to secure the presence of the defendant to answer any charge or charges against him, and to respond to the judgment of the court, while at the same time bond affords the defendant freedom from harassment and confinement before he is proven guilty of the offense charged. Remission of forfeited bonds while their subjects are still at large would undermine that purpose."United States v. Diaz, 811 F.2d 1412, 1415 (11th Cir. 1987) (internal quotation marks and citations omitted). Since Pham remains at large, and his flight caused the government to expend resources preparing for his trial unnecessarily, the Court finds these facts militate against relieving the surety of her financial obligation to the government under the bond she signed.
Mitigating Factors
The Court has considered whether there are mitigating factors that would support either setting aside the bail forfeiture or remitting a default judgment entered pursuant to the applicable Rule. Le contends that her financial status, as described in her written submission, should be weighed by the court because a bail forfeiture and a concomitant default judgment would be an economic hardship for her. She maintains that her financial status serves as a mitigating factor. However, in a matter such as this, "the court cannot consider . . . the financial hardship [that would be visited upon a surety] because it is the interests of justice — and not the interests of [a surety] — which must be considered." United States v. Carvajal, 674 F. Supp. 973, 974 (E.D.N.Y. 1987) (internal quotation marks and citations omitted). Moreover, as the government points out, in its written submissions to the Court, any mitigation here would be offset by the surety's failure to report to the court or to the government that Pham had violated the conditions which permitted him to be at liberty while he awaited the commencement of his trial.
The Court finds, based on the record before it, that no mitigating factors exist that would support setting aside a bail forfeiture or remitting a default judgment entered pursuant to Rule 46 of the Federal Rules of Criminal Procedure. Pham elected to flee the country approximately two months before his trial was scheduled to begin. Le learned of this and did not advise the court. Moreover, notwithstanding Le's claim that she has limited financial resources available to her, her "Summary Balance Sheet" shows that Le has equity in real estate that exceeds the amount of any default judgment that might be entered against her. In addition, as of January 2005, Le's total assets exceeded her total liabilities by an amount that exceeds the full amount of the appearance bond by several thousand dollars.
Apprehending the Defendant
Le reports that she made efforts to locate Pham while in Vietnam. The government contends that Le has not provided any information to it that would enable the government to use its own resources to attempt to locate Pham in Vietnam and, thereafter, have him returned to this country to stand trial. Nothing in the submission made by Le to the Court indicates that any impediment exists to her providing the government with any information she might have that would enable the government to pursue Pham in Vietnam. Her failure to communicate that type of information to the government is a factor that weighs against her.
Status of the Surety
Le is not a professional surety who is intimately familiar with the obligations and risks associated with being a surety on an appearance bond. However, the terms and conditions of the appearance bond and the surety's obligations and responsibilities thereunder are set forth at that portion of the bond that is immediately above the space where Pham and Le signed the bond. Le does not claim that she did not read that text. In any event, the government has represented that the conditions of the bond and the obligations Le undertook when she executed the bond were explained to her orally by the Clerk of Court's representative who also signed the bond. Consequently, any lack of familiarity Le may have had with her responsibilities and obligations as a surety on Pham's appearance bond, while worthy of note, does not mandate a finding that the bail forfeiture should be set aside in this case or that any default judgment entered pursuant to Fed.R.Crim.P. 46(f)(3) should be remitted.
Having weighed the various factors that are typically considered when an application, such as the one before the Court, is made, the Court finds that the scale tips in favor of the government and against Le. The Court finds further that, based on the written submissions made by the parties and, in particular, the data respecting Le's assets and liabilities, as reflected in the "Summary Balance Sheet, Le has equity in real property in the amount of $102,000. The equity Le has in that property would enable her to meet the financial obligation she undertook in agreeing to be a surety on Pham's $50,000 appearance bond. In addition, the Court is mindful that, if a default judgment is entered against Le and Pham, nothing prevents her from seeking a reduction in her financial obligation as Pham's surety should he be returned to the court to answer for the charge made against him in this judicial district. "In most instances, [a] surety seeks a reduction after the defendant has been returned to the court's jurisdiction." United States v. Velez, 693 F.2d 1081, 1083 (11th Cir. 1982).
IV. RECOMMENDATION
For the reasons set forth above, the court should declare the defendant's bail forfeited and should enter a default judgment against Pham and Le, jointly and severally, for the full amount of the appearance bond they executed in September 2004, to permit Pham to be at liberty pending the disposition of the criminal charge that had been lodged against him in this judicial district.