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U.S. v. Warshak

United States District Court, S.D. Ohio, Western Division
Feb 5, 2009
NO. 1:06-CR-00111 (S.D. Ohio Feb. 5, 2009)

Opinion

NO. 1:06-CR-00111.

February 5, 2009


OPINION AND ORDER


This matter is before the Court on the government's Motion for Summary Judgment (doc. 736), Carri Warshak's Response in Opposition (doc. 749), the government's Reply (doc. 750), and the government's Notice of Errata (doc. 751). For the reasons indicated herein, the Court GRANTS the government's Motion against all of Petitioner's claimed ownership interests to the subject property, with the exception of the grand piano.

The government moves the Court pursuant to Fed.R.Crim.P. 32.2(c)(1)(B) and Fed.R.Civ.P. 56 for summary judgment against the claimed ownership interest of Carrie Warshak, ("Petitioner") individually and as guardian, mother, and next friend of her minor children, in the subject property listed in Petitioner's April 19, 2008 and September 11, 2008 third-party Petitions (doc. 736). In such Petitions (doc. 467, 682), Petitioner claims an interest in six parcels of real estate, Fifth Third Checking Account No. 8440, a QTIP Trust and 2004 Gift Trust, a Colony Life Insurance Warshak family policy, and a grand piano (Id.). By Order on March 7, 2008, the Court had found all of the assets, except the grand piano, forfeitable under a proceeds and money laundering theory of forfeiture (doc. 418). In the instant motion, the government seeks summary judgment that Petitioner has failed to establish individual or relational interest to the subject properties, as well as to a grand piano, which it listed as a substitute asset in the Second Preliminary Order of Forfeiture (doc. 736).

Petitioner argues there are material facts in dispute that preclude the granting of summary judgment for the government (doc. 749). Specifically, she argues the only evidence presented in the case regarding the grand piano is her sworn statement that the piano was gifted to her in February 1999, prior to the existence of Berkeley Premium Nutraceuticals (Id.). Petitioner argues only the Defendant's interests in property can be forfeited, and the purpose of the forfeiture statute is not to divest innocent persons of their property rights (Id.). As the only evidence before the Court is that the piano belonged to Petitioner prior to the events in the Indictment, Petitioner argues the government's motion for summary judgment as to the piano must be overruled (Id.).

As for the real property, Petitioner argues she has community property rights under California law, and dower interests that combine to provide her with superior interests to that of the government (Id.). Petitioner further contends as to the QTIP Trust and 2004 Gift Trust that her interests are superior to Defendant Steve Warshak, who lost his property interests once the money was placed in the trusts (Id.). Accordingly, she argues, she and her children have established both a constructive trust as well as an actual trust, such that their legal interests in the property are superior to the government's forfeiture claim (Id.).

The government replies, conceding that Petitioner brings her strongest argument in relation to the grand piano, though critiquing Petitioner's failure to provide any documentation to corroborate her claim (doc. 750). However, the government argues that Petitioner's theories as to the remaining property at issue fail to acknowledge that a third party cannot prevail in asserting an interest to proceeds of a crime where, as here, all of the subject property was purchased, refinanced or funded with such proceeds or consisted of money laundering transactions (Id.). The government contends Petitioner fails to show she acquired an interest in the subject property which vested title in her rather than Steven Warshak, or that her interest was superior to any interests of Steven Warshak at the time of the commission of the acts giving rise to the forfeiture (Id. citing 21 U.S.C. § 853(n)(6)(A)).

Having reviewed this matter, the Court finds the government's position well-taken as to the real properties, Account 8440, the QTIP Trust, the Gift Trust, and the life insurance policy. The Court finds no genuine dispute that the proceeds funding the purchase of all of such assets emanated from Defendant Steven Warshak's scheme to defraud that ran from 2001 to 2006. As such, the criminal activity gave rise to forfeiture and divested Steven Warshak of any property rights. Steven Warshak was therefore unable to make a valid transfer of the property, so Petitioner obtained no valid interest in the property. United States v. Hooper, 229 F.3d 818, 821 (9th Cir. 2000) (where crime generating proceeds used to purchase forfeited property preceded the purchase, petitioners unable to assert their community property interest under 18 U.S.C. § 853(n)(6)(A)), United States v. Jamieson, No. 3:02-CR-707, 2007 U.S. Dist. LEXIS 5758, *14 (N.D. Ohio, January 26, 2007) ("[W]hen the law steps in and divests the owner of his seizin due to an infirmity or incident of his ownership which existed at the time the owner became seized of the property, or at the time of marriage, such act and policy of law extinguishes an inchoate dower interest in the property.").

The Court finds the grand piano escapes the reach of the government's motion, as Petitioner's sworn testimony shows she obtained it before the criminal activity that gave rise to forfeiture. It appears, therefore, Petitioner became seized of the grand piano, and the government has presented no facts disputing that conclusion, or showing it is entitled to judgment regarding the piano.

Accordingly, the Court GRANTS IN PART the government's Motion for Summary Judgment (doc. 736), to the extent that it finds no dispute that Petitioner can establish no ownership interest in the real properties: 5130 Rollman, 5140 Rollman, 5150 Rollman, 7027 Beech Hollow, 5758 San Elijo, and 7701 Sagamore; no ownership interest in Fifth Third Checking Account No. 8440; no ownership interest in the National Financial Services LLC/Equity Services Inc. Account "The Carri E Warshak 2004 QTIP Trust U/A 10/1/04;" no ownership interest in the National Financial Services LLC/Equity Services Inc. Account "The Warshak 2004 Gift Trust U/A 10/1/04;" and no ownership interest in the contents of First Colony Life Insurance Policy in the name of the "Warshak Family 2004 TST UTAD 10/01/2004." Fed.R.Crim.P. 32.2(c)(1)(B) and Fed.R.Civ.P. 56. However, the Court DENIES IN PART the government's motion as to the grand piano, finding a genuine dispute as to whether Petitioner has established an individual interest in such property. Id.

SO ORDERED.


Summaries of

U.S. v. Warshak

United States District Court, S.D. Ohio, Western Division
Feb 5, 2009
NO. 1:06-CR-00111 (S.D. Ohio Feb. 5, 2009)
Case details for

U.S. v. Warshak

Case Details

Full title:UNITED STATES OF AMERICA v. STEVEN E. WARSHAK, et al

Court:United States District Court, S.D. Ohio, Western Division

Date published: Feb 5, 2009

Citations

NO. 1:06-CR-00111 (S.D. Ohio Feb. 5, 2009)