Opinion
Criminal No. 00-851 (JAF).
April 8, 2009
OPINION AND ORDER
Claimants, Hiromo Yamamoto and Beach Investment Corporation ("BIC"), petition this court for the release of proceeds from the sale of certain real property in Florida. Docket No. 161. Respondent, the United States of America ("the government"), seized the property in connection with the prosecution of Defendant, Murli Datwani. Id. Respondent opposes the petition.Docket No. 164. Claimants reply. Docket No. 167.
I. Factual and Procedural Summary
On January 24, 2001, the government indicted Defendant for fifty-five counts of money laundering on behalf of a narcotics trafficking ring and one count of conspiracy to commit money laundering in violation of 18 U.S.C. §§ 1956-57. Docket No. 161. The indictment included a count for forfeiture of proceeds up to at least $4,233,069 pursuant to 18 U.S.C. § 982 and 21 U.S.C. § 853. Id. In connection with the indictment, the government recorded a lis pendens in Dade County, Florida, against certain real property located at 30A Indian Creek Drive in Indian Creek, Florida, on January 24, 2001. Docket Nos. 120, 128. The government alleged that Defendant was the beneficial owner of this property at the time of his indictment, despite the fact that he was no longer the official owner on record. Docket Nos. 128, 164. The record owner of the property was BIC, a Panamanian company, which held the property in trust for the benefit of Yamomoto, a Japanese national, via Lunamar Zona Libre S.A., a Panamanian company.Docket Nos. 161, 164.
On September 13, 2006, Claimants and Masayuki Naemura, a Japanese national, moved to vacate the lis pendens to permit the sale of the property and sequester $4,233,069 in proceeds from the sale as substitute assets pending ultimate forfeiture proceedings. Docket No. 133. We granted the motion on September 25, 2006. Docket No. 139. Claimants and Naemura subsequently sold the property and deposited the stipulated sum with this court on March 12, 2008. Docket No. 158. To date, Defendant remains a fugitive, and the government has not prosecuted him for the charged offenses. Docket Nos. 161, 167. Thus, formal forfeiture proceedings have yet to commence with respect to the proceeds.Id.
On December 15, 2008, Claimants lodged a bill in this court seeking a hearing to determine the ownership of the real property and for the release of proceeds from the judicially-sanctioned sale. Docket No. 161. The government opposed on January 14, 2009.Docket No. 164. Claimants replied on January 21, 2009. Docket No. 167.
II. Analysis
Claimants contend that they are interested third-parties to this case who were the rightful owners of the real property and, hence, are entitled to recover the proceeds from the sale. Docket Nos. 161, 167. The government maintains, however, that Claimants are, in fact, acting on behalf of Defendant and are, thus, not entitled to the proceeds. Docket No. 164. Claimants further argue that we should apply United States v. Paris-López to liberate the proceeds in this case. See 111 F. Supp. 2d 100, 102 (D.P.R. 2000) (citing United States v. $8,850 in U.S. Currency, 461 U.S. 555 (1983)). We disagree, because we find thatParis-López is distinguishable from this case.Where a defendant is indicted for drug-related offenses, the government may apply for a protective order "to preserve the availability of property" that may be subject to forfeiture upon the defendant's conviction. 21 U.S.C. § 853(e)(1)(A). Ordinarily, third-parties interested in the seized assets may not intervene until after the court issues an order of forfeiture, § 853(k), (n), which follows the defendant's conviction in the principal criminal case, § 853(a).
Section 853 specifically bars third-parties from "commenc[ing] an action at law or equity against the United States concerning the validity of [their] alleged interest in the property subsequent to the filing of an indictment." 21 U.S.C. § 853(k). While third-parties may not challenge the ultimate forfeitability of assets seized under § 853, they may ask the court to modify the restraint of their assets in proceedings related to the protective order under § 853(e). See United States v. Real Property in Waterboro, 64 F.3d 752, 755-56 (1st Cir. 1995).
Our prior order lifting the lis pendens obeyed the rule inWaterboro. Docket No. 139. We modified the restraint at Claimants' behest to permit them to sell the property and reap profits in excess of the value that the government seeks to forfeit. See id. We, thus, struck a balance between the need to alleviate harm to Claimants and the admonition to preserve assets for forfeiture. See United States v. Monsanto, 491 U.S. 600, 613 (1989).
The First Circuit has not decided whether the bar under § 853(k) is jurisdictional. See id. at 755 n. 1. However, other circuits have apparently imposed the restriction as a jurisdictional bar. See, e.g., DSI Assocs. LLC v. United States, 496 F.3d 175, 183-84 (2d Cir. 2007) (barring intervention under Fed.R.Civ.P. 24); Roberts v. United States, 141 F.3d 1468, 1469-71 (11th Cir. 1998) (barring, sua sponte, claim under Fifth Amendment). Moreover, we must construe § 853 liberally to effectuate its stated purpose of securing property for eventual forfeiture. 21 U.S.C. § 853(o); United States v. Monsanto, 491 U.S. 600, 613 (1989). As the prohibition appears absolute and prevents premature interference with forfeiture, we hold that the bar is jurisdictional and precludes a complaint under Slocum. As federal courts have an independent duty to assess their own subject-matter jurisdiction, Arbaugh v. Y H Corp., 546 U.S. 500, 514 (2006), we must apply § 853(k), sua sponte, if the restriction is relevant to a case.
In Paris-López, the third-party claimants challenged the temporal scope of a protective order in a hearing to modify that order. United States v. Paris-López, No. 98-189, 2000 U.S. Dist. LEXIS 12841, at *3-4 (D.P.R. May 12, 2000). As in this case, the seizure was pursuant to the defendant's indictment for drug-related offenses, and was of indefinite duration because the defendant remained a fugitive at large. Id. After adopting the magistrate's recommendation for a modified restraint of assets, the district court ordered the release of the assets in toto as relief. Paris-López, 111 F. Supp. 2d at 103.
Although the district court opinion set out the contours of equitable relief where the government tarries in prosecuting forfeitures, id. at 100-03, that case arose from petitions to modify the protective order under § 853(e), Paris-López, 2000 U.S. Dist. LEXIS 12841, at *3, rather than challenges to the pending forfeiture. Accordingly, the court had no occasion to consider the applicability of § 853(k). See generally Paris-López, 111 F. Supp. 2d at 100-03.
In the case at bar, Claimants submit that they are interested third-parties to Defendant's criminal case, and adjudication of forfeiture remains impossible by dint of Defendant's evasion of justice. Docket Nos. 161, 167. Claimants request an early adjudication of the underlying ownership of the sequestered proceeds and the legality of the pending forfeiture itself. See id. As noted above, Paris-López affords no relief from § 853(k) as it pertains only to proceedings under § 853(e). We, therefore, bar this complaint under the express language of 21 U.S.C. § 853(k).
III. Conclusion
Accordingly, we hereby DENY Claimants' motion for a hearing to adjudicate ownership and release proceeds, Docket No. 161. We DISMISS Claimants' bill in equity WITH PREJUDICE.