Opinion
CRIMINAL NO. 00-001 (PG).
August 8, 2000.
Appellant Counselors: Robert A. Knief, U.S. Department of Justice.
Appellee Counselors: Luis R. Rivera-Rodriguez, Esq., Ramon Garcia-Garcia, Esq.
REPORT AND RECOMMENDATION
A hearing was held regarding the defendants' motion requesting release of the monies intended to pay for attorney's fees that was referred by the court. D.E. #210, 199.
The government had filed a request for interlocutory sate of the real estate property at issue, that is, defendant's apartment at Oceania IV Condominium in Dade County, Florida. The bill of particulars previously filed alleged the property was subject to forfeiture.
The property has been described as: Unit #1946 of OCEANIA IV, A CONDOMINIUM, according to the Declaration of Condominium thereof recorded in Official Records Book 16945, at page 3274, of the Public Records of Dade County, Florida, together with an undivided interest in the common elements appurtenant thereto. Deed Owner: Osvaldo Rivera Colon a/k/a Ubaldo Rivera Colon and Elena Corchado.
Pursuant to 21 U.S.C. § 853, a person convicted of the offenses as charged in the indictment shall forfeit any property, to include, real property, tangible and intangible personal property, including rights, privileges, interests, claims and securities, that were derived from the commission of said offenses.
The government's Joint Motion for Interlocutory Sale and Memorandum in Support Thereof (D.E. #186) states that defendant has been charged in an indictment with violations to 21 U.S.C. § 846; § 841(a)(1) (drug trafficking); 18 U.S.C. § 1956 (h) and § 1956(a)(1)(B)(i) and § 1344 (money laundering). The indictment alleges certain properties are subject to forfeiture. Subsequently, the government filed a bill of particulars alleging that the property above described was also forfeitable and placed a lis pendis over the property. Both defendant and the government agreed to the sale of the property and that the monies be deposited in an escrow account. The defendant agreed to the interlocutory sale conditioned upon such proceeds being placed in an escrow account pending a hearing for release of assets intended to pay attorney's fees. The government wants these proceeds to be deposited in an escrow account under the U.S. Marshal pending conclusion of the criminal proceedings against defendants and the final resolution of the forfeiture claims.
Defendant has claimed that the restraint on the above asset under the criminal forfeiture provision, to include the funds necessary to pay for attorney's fees, violates his right to counsel of choice. He also states that the pretrial restraint of assets without a post-restraint hearing violates his due process right. (D.E. #123). More so since the Oceania IV Condominium was not part of the indictment and there is no independent finding of probable cause by a grand jury to believe the property is subject to forfeiture. Thus, defendant seeks to modify the restraining order to permit him to expend his funds to retain counsel of his choice.
At the hearing held on July 11, 2000, the government presented documentary evidence as well as the testimony of IRS Agent Kelly Martimez. Exhibit 1. The real estate property at Oceania IV Condominium was purchased by defendant through a down payment and a mortgage loan obtained of $200,000 and $260,000, respectively. There is available documentary tracing of the cash deposits and the money orders purchased, which were given towards the purchase of the real estate to Chicago Title Co. Part of the money traced as down payment on January 2, 1996, was through a manager's check purchased by Carmen L. Gonzalez from funds of Sharimar Auto Sales Corp. at Citibank payable to the defendant for $20,000. Said corporation has been under investigation for some time as suspect of laundering drug proceeds and is no longer in existence. Defendant also arranged to use money from his account with First Bank d/b/a Super Ganado for the down payment. The investigation with the government of Puerto Rico agencies has failed to disclose the existence of any registered corporation or company under said name. No money has been traced from said account as related to the cattle business as claimed, except for two checks for purchases by the defendant from Hacienda Las Carolinas. Other checks issued have been traced towards the purchase by defendant of vehicles, offshore racing boats and other expenses unrelated to any cattle business.
The Super Ganado account has also shown deposits of checks issued by K-Mart Corporation in the amount of $40,333.34. The investigation revealed Mr. Eduardo Ferrer, who holds the tenant's contract of K-Mart had assigned rent payments to the defendant who has provided him with a cash loan in the amount $450,000.00. Mr. Ferrer has also obtained an official check in the amount of $20,000 from Scotia Bank and made same payable to Chicago Title, as an instalment towards the repayment of the loan.
However, income tax records filed by defendant and his wife informed income not exceeding a $30,000-40,000, for several recent years.
A certificate regarding income tax returns shows returns were timely filed for 1992, 1993, 1995 and 1997, untimely for 1994 and 1996, and no income tax for 1990 and 1991.
In addition, a search warrant executed for defendant's business and residence has failed to reveal any additional business records, except for the existence of a bank account under the name of Super Ganado, indicating the operation of a cattle business; no business cards, no additional contacts and no documents were detected.
In regard to defendant's unreported income, there was a manager's check for $35,000, that was also issued to Chicago Title towards the purchase of the apartment at Oceania IV by a representative of one BVF Construction. This is a closely-held corporation of Mr. Basilio Rivera Rodriguez who has also been indicted with the defendant for money laundering offenses. The corporation has also obtained official checks towards the purchase of an offshore racing boat in Miami, Florida, priced in $200,000, that belongs to the defendant. Statements from codefendant Rivera have indicated he worked with defendant Ubaldo Rivera-Colon who supervises the projects and had paid defendant in advance. Still, defendant has little experience in the construction business and even Mr. Basilio Rivera's reported income is less than the $40,000, the latter claims to have paid his supervisor, defendant Ubaldo Rivera-Colon, more than twice what he reports to make in a year. This check of $35,000, was deposited to the defendant's account with Super Ganado instead of being paid to Chicago Title. Numerous other checks obtained either by the defendant's father, Ubaldo Rivera Archia and from the Sharimar Auto's account payable to Chicago Title were never actually paid over to Chicago Title but were instead deposited with defendant's account at Super Ganado. Subsequently, after all these checks had been deposited, the Super Ganado account was debited with the purchase of one single manager's check to Chicago Title for $196,566.42, towards the purchase of the Oceania IV condominium. Other transactions of defendant using third parties to buy checks have been traced towards the purchase of luxury auto and racing boats.
The defendant's mortgage loan application informs his residence as Caparra Classics Condominium in Guaynabo and as owner of same. The fact is that the defendant seems to be renting from his mother, to whom a prior seizure adjudicated the property as a good faith third party owner. Documents also appear that defendant is the President of Colett Development, Inc., seemly engaged in antique car importation, for the last seven years, but no accounts or documents were obtained as to the business activities of said corporation, except that it appears as a registered corporation.
The government has also interviewed, as part of its investigation, the accountant who prepared the defendant's tax returns for 1997, Mr. Eugenio Torres. He also prepared the financial statements that were substantially different to the figures showed in the returns. He indicated these were prepared from the information provided by the defendant and the significant difference was the defendant's responsibility. Although the accountant had received a handwritten list of figures from the defendant to prepare the financial documentation, which are usually kept as back-up support by accountants, the client did not allow copies to be made and were returned after the statements and returns were prepared.
The defendant also has indicated having other sources of income that did not require reporting, such as lottery winnings, which have been informed as three (3) checks belonging to defendant and three others winnings by his mother, for a total of six lottery winnings in a two-year period. The government's investigation has been unable to detect any legal source of income of the defendant that could support his life style or the purchase of the assets, particularly the condominium at issue at Oceania IV, neither the Mercedes, Lamborghini or Land Rover vehicles nor American Express charges.
An employee reported as working with the defendant in Super Ganado, Mr. Guillermo Rodriguez, is already deceased. His family has been interviewed in relation to the heads of cattle once reported in the check of Hacienda Las Carolinas, worth about $800 each for a total of $80,000. People in the cattle business, as proffered by defense counsel, may testify that the cattle industry would make possible to duplicate the investment in one year, if the herd would become impregnated. It was also proffered, without any documentary or testimonial evidence in support, that one of the defendant's property in Florida had been destroyed by a hurricane and claimed to his policy with Allstate Insurance. Upon fixing the house after settlement of the insurance claim, it was sold for $150,000. The defendant also claims through counsel, without evidence in support, that he was engaged in the car sales business for which no car dealer license would be required.
Regarding the petition that these monies be released for payment of attorney's fees, as set forth in United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657 (1989) there is no violation to the Sixth Amendment right to counsel or Fifth Amendment's due process clause when defendant's assets are ordered forfeited even when he seeks to use assets to pay attorney. See also Caplin Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646 (1989) wherein neither the Fifth nor the Sixth Amendment requires Congress to permit a defendant to use assets adjudged to be forfeitable to pay the defendant's legal fees. Defendant's assets may be frozen before conviction based on a finding of probable cause to believe the assets are forfeitable. United States v. $8,850, 461 U.S. 555, 103 S.Ct. 2005 (19 83); Calero Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 94 S.Ct. 2080 (1974).
United States v. Register, 182 F.3d 820 (11th Cir. 1999) (The choice of counsel of choice belongs solely to criminal defendants possessing legitimate, uncontested assets).
Defendant "had no Sixth Amendment right to use assets to the extent that those assets belong to the United States". United States v. Caplin, 491 U.S. at 631.
United States v. Moffitt, Zwerling Kemler, P.C.. 83 F.3d 660 (4th Cir. 1996) (Attorney's fees are 26 subject to forfeiture wherein bill of particulars had pinpoint assets since there is no constitutional right to spend another person's money for services rendered by an attorney).
The evidence presented by the government, undisputed by the defendant, provides probable cause sufficient to allow the initiation of the forfeiture claim and that the monies of the sale as agreed upon be deposited in an escrow account subject to appropriate forfeiture proceedings.
IT IS SO RECOMMENDED.