Opinion
Case No. 1:20 CR 392
2022-05-12
UNITED STATES of America, Plaintiff v. Charles VACCARO, et al., Defendants
Alejandro A. Abreu, James L. Morford, Brad J. Beeson, Office of the U.S. Attorney, Cleveland, OH, for Plaintiff. Randy S. Zelin, Law Office of Randy Scott Zelin, New York, NY, Eric C. Nemecek, Ian N. Friedman, Friedman & Nemecek, Cleveland, OH, for Defendant Charles Vaccaro. Robert G. Amsel, Ross Amsel Raben & Nascimento, Miami, FL, for Defendant Dror Svorai. Edward M. Mullin, Beachwood, OH, Russell J. Williams, Williams, Hilal, Wigand, Grande, Fort Lauderdale, FL, for Defendant Dennis Ruggeri. Michael D. Orenstein, Law Office Michael D. Orenstein, Hollywood, FL, for Defendant Kevin Hagen. Justin J. Roberts, Cleveland, OH, for Defendant Gary Berlly. Mark David Hunter, Hunter Taubman Fischer & Li, Coral Gables, FL, for Defendant Yosef Biton.
Alejandro A. Abreu, James L. Morford, Brad J. Beeson, Office of the U.S. Attorney, Cleveland, OH, for Plaintiff.
Randy S. Zelin, Law Office of Randy Scott Zelin, New York, NY, Eric C. Nemecek, Ian N. Friedman, Friedman & Nemecek, Cleveland, OH, for Defendant Charles Vaccaro.
Robert G. Amsel, Ross Amsel Raben & Nascimento, Miami, FL, for Defendant Dror Svorai.
Edward M. Mullin, Beachwood, OH, Russell J. Williams, Williams, Hilal, Wigand, Grande, Fort Lauderdale, FL, for Defendant Dennis Ruggeri.
Michael D. Orenstein, Law Office Michael D. Orenstein, Hollywood, FL, for Defendant Kevin Hagen.
Justin J. Roberts, Cleveland, OH, for Defendant Gary Berlly.
Mark David Hunter, Hunter Taubman Fischer & Li, Coral Gables, FL, for Defendant Yosef Biton.
ORDER
SOLOMON OLIVER, JR., UNITED STATES DISTRICT JUDGE
Currently pending before the court in the above-captioned case are Defendant Charles Vaccaro's ("Defendant" or "Vaccaro") Motion for Return of the Inflatable Boat ("Motion for Return of the Inflatable") (ECF No. 150); Motion for Time to Respond to the Government's Supplement ("Motion for Time") (ECF No. 180); and Motion to Exclude the Government's Supplement ("Motion to Strike") (ECF No. 181). For the following reasons, the court denies the Motion for Return of the Inflatable, denies the Motion for Time as moot, and denies the Motion to Strike.
I. BACKGROUND
On July 22, 2019, Vaccaro was arrested pursuant to a criminal Complaint (ECF No. 1) in the Eastern District of New York. Vaccaro had his initial appearance on that same day, and was released on a $1,000,000 secured bond (the "Bond"), which was set by a Magistrate Judge in the Eastern District of New York. (Order Setting Conditions of Release and Bond, at PageID #94, ECF No. 4-3.) At that time, Vaccaro's yacht (the "Yacht"), along with a 2018 Rolls Royce, was used as security for the Bond. (Id. ) On July 23, 2020, a grand jury in this district returned a 15-count Indictment against Vaccaro based on his alleged involvement in a conspiracy to commit securities fraud, wire fraud, money laundering, as well as the substantive offenses of securities fraud and wire fraud. (Indictment, ECF No. 21.) Then, on April 29, 2021, a grand jury in this district returned a 19-count Superseding Indictment against Vaccaro, which named the Yacht as subject to forfeiture.
On August 5, 2021, the Government seized the Yacht. That same day, Vaccaro filed a Motion to Stay (ECF No. 128), contesting the seizure of the Yacht. The parties vigorously litigated the issues pertaining to the Yacht's seizure. On November 21, 2021, the court issued an Order (ECF No. 156) denying the Motion to Stay to the extent that it sought an order compelling the Government to return the Yacht to Vaccaro.
On October 27, 2021, Vaccaro filed the instant Motion for Return of the Inflatable (ECF No. 150), which asks the court for an order compelling the Government to return an inflatable boat (the "Inflatable") that was seized when the Government executed the seizure warrant for the Yacht. (Id. at PageID #841–842.) On November 10, 2021, the Government filed a Response in Opposition to the Motion (ECF No. 154), asserting that the seizure of the Inflatable was proper because the Inflatable plays an "inseparable role in the Yacht's operation[,]" which is demonstrated by the fact that the Inflatable was affixed to the Yacht at the time of the seizure. (Opp'n at PageID #852–853, ECF No. 154.) On January 31, 2022, Vaccaro filed a reply (ECF No. 169) in support of his Motion for Return of the Inflatable. Vaccaro also submitted several supplemental letters reiterating his request for the return of the Inflatable. (ECF Nos. 171, 176, 177.)
On April 7, 2022, the Government filed a Supplement to its Response in Opposition to the Motion ("Supplement") (ECF No. 179), indicating that "the Federal Bureau of Investigation (FBI), through further analysis/investigation, has now been able to trace the purchase of the [Inflatable] back to proceeds obtained by defendant Vaccaro as a result of the fraudulent scheme charged in Count 1 of the Superseding Indictment." (Id. at PageID #927.) As a result of this investigation, the Government contends that "probable cause now exists to believe that the [Inflatable] is subject to forfeiture to the United States in its own right." (Id. )
On April 12, 2022, Vaccaro filed a letter (ECF No. 180)—which the court will construe as a Motion for Time—asking the court to strike the Government's Supplement as untimely or in the alternative, grant him an extension of time until April 18, 2022 to file a response to the Government's Supplement. On April 18, 2022, Vaccaro filed another letter (ECF No. 181), which the court will construe as a Motion to Strike, reiterating his request that the court strike the Government's Supplement while responding to the merits of the Government's Supplement. In the Motion to Strike, Vaccaro asserts that the Supplement is untimely because the Motion for Return of the Inflatable was filed several months ago. (Mot. to Strike at PageID #933–934, ECF No. 181.) After considering the parties’ arguments and relevant case law, the court denies the Motion to Strike for the following two reasons. First, as the Government points out, Vaccaro has filed several supplemental letters, the most recent of which was filed less than three weeks prior to the filing of the Government's Supplement. Second, the court finds that the evidence offered in the Government's Supplement is necessary and helpful in deciding the Motion to Return the Inflatable. See Fed. R. Crim. P. 41(g) (explaining that "[t]he court must receive evidence on any factual issue necessary to decide the motion").
In light of the court's ruling on the Motion to Strike, the court denies the Motion for Time (ECF No. 180) as moot. However, the court will consider the arguments raised by Vaccaro in the Motion to Strike with respect to the issues concerning the return of the Inflatable in its ruling on the Motion for Return of the Inflatable.
II. LAW AND ANALYSIS
As an initial matter, the court first addresses Vaccaro's argument that the Inflatable must be returned because it was not named in the seizure warrant. As the Sixth Circuit has explained, "even evidence not described in a search warrant may be seized if it is reasonably related to the offense which formed the basis for the search warrant." United States v. Savoy , 280 F. App'x 504, 510 (6th Cir. 2008). Here, as the Government points out, the Inflatable was affixed to the Yacht when the Government executed the seizure warrant for the Yacht. (Resp. at PageID #852, ECF No. 154.) According to the Government, inflatable boats such as the one seized in this case are primarily used "to transfer people and property to and from the yacht when the yacht cannot dock at a suitably sized marina." (Resp. at PageID #852, ECF No. 154.) As such, the Government maintains that the seizure of the Inflatable was reasonable because: (1) the Inflatable is central to the Yacht's operation; and (2) the Government contends that if the Yacht were sold, it would be reasonable to assume that the Inflatable would have been a part of any such sale. (Id. at PageID #852–853.)
After considering the parties’ arguments and relevant case law, the court finds the Government's position to be well-taken. Indeed, the seizure of the Inflatable was valid because the Inflatable is reasonably related to the reason for the seizure warrant—namely, the Government seized the Yacht as it was listed for sale by Vaccaro despite the fact that it was subject to forfeiture. A review of the Yacht's sale brochure reveals that the Inflatable is pictured in the photograph on the first page of the brochure. (ECF No. 130-2.) Accordingly, the court finds that the seizure of the Inflatable was lawful because the seizure warrant gave the Government the authority to seize the Yacht, and at the time of the seizure, there was no indication that the Inflatable was not a part of the Yacht.
The court also finds that the Motion for Return of the Inflatable must be denied for the independent reason that the Government has a ‘continuing interest’ in the Inflatable. Courts have explained that "when considering a motion to return, the court must balance the legitimate needs of the United States against the property rights of the moving party." United States v. Popham , 382 F. Supp. 2d 942, 956 (E.D. Mich. 2005) ; United States v. Ford , No. 5:15-CR-023, 2017 WL 6564065, at *1 (W.D. Ky. Dec. 21, 2017) (same). However, the Sixth Circuit has made clear that "[a] defendant's motion for return of property will be unavailing where the government has a continuing interest in the property." United States v. Francis , 646 F.2d 251, 263 (6th Cir. 1981) ; see also Popham , 382 F. Supp. 2d at 956 (explaining that "[t]he government can demonstrate a continuing interest by showing that the property is contraband or necessary for an ongoing investigation"); see also United States v. Johnson , No. 21-MC-50683, 2022 WL 107579, at *2 (E.D. Mich. Jan. 11, 2022) (quoting Fed. R. Crim. P. 41(g) advisory committee's note to the 1989 amendment for the proposition that "[i]f the United States has a need for the property in an investigation or prosecution, its retention of the property is generally reasonable").
Here, the Government points to a transaction on March 22, 2019—as evidence that the Inflatable is subject to forfeiture—where "Vaccaro wired $28,670.00 ... to purchase the subject [Inflatable]," from a bank account in which it maintains that "nearly all of the funds" that came from that account "were derived from the fraudulent scheme." (Gov't Suppl. at PageID #929, ECF No. 179.) Vaccaro did not offer any evidence to refute the Government's position. Instead, he argued that it is possible that the funds used to purchase the Inflatable could have been untainted because the Government could not trace all of the money in the account back to the alleged fraudulent scheme. (Mot. to Strike at PageID #934, ECF No. 181.)
However, as the Government points out, the Sixth Circuit rejected a similar argument in United States v. Smith , 749 F.3d 465 (6th Cir. 2014). (Gov't Suppl. at PageID #928, ECF No. 179 (citing Smith , 749 F.3d at 488–489 ).) Indeed, on appeal, the defendant in Smith argued that there was insufficient evidence to support the district court's forfeiture judgment against him. Smith , 749 F.3d at 488. At issue were two cashier's checks that were seized from a safe located in the defendant's father's residence. Id. There, the Sixth Circuit affirmed the district court's forfeiture judgment finding that the cashier's checks must be forfeited reasoning that "there is evidence that the checks in question are proceeds that resulted, whether directly or indirectly, from unlawful activity." Id. In reaching its conclusion that there was sufficient evidence to establish that the checks were subject to forfeiture, the Smith court emphasized the fact that the Government introduced evidence showing that fraudulent proceeds were deposited into the accounts on which the checks were drawn, and the value of the "deposits received greatly exceeded the amounts payable in the checks." Id. Here, the Government maintains that over 96% of the funds deposited in the account used to purchase the Inflatable were derived from the alleged fraudulent scheme. (Gov't Reply to Mot. to Strike at PageID #941, ECF No. 183.) Because the value of the alleged fraudulent deposits greatly exceeded the purchase price of the Inflatable and no evidence has not presented which counters the Government's position, the court finds that the Government has met its burden to show that the Inflatable is subject to forfeiture, and thus, the Government has a ‘continuing interest’ in the Inflatable. Accordingly, the court hereby denies Vaccaro's Motion for Return of the Inflatable.
III. CONCLUSION
For the foregoing reasons, the court denies the Motion for Return of the Inflatable (ECF No. 150), denies the Motion for Time as moot (ECF No. 180), and denies the Motion to Strike (ECF No. 181).
IT IS SO ORDERED.