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United States v. Miller 26 F.Supp.2d 415 U.S. District Court, Northern District of New York Oct. 7, 1998 [*418] COUNSEL: Thomas J. Maroney, Office of the
United, States Attorney, Syracuse, NY, for the United States; Gregory A. West,
Ausa, of counsel. MEMORANDUM-DECISION
& ORDER JUDGE:
McAVOY, Chief Judge. On July 20,
1998, this Court heard oral argument and decided from the bench numerous
discovery motions made by defendants. [FN1] The Court now addresses
defendants’ [*419]
remaining motions, seeking variously: to strike surplusage from the indictment;
dismissal of the indictment; and the return of seized property. FN1. On September 2, 1998, the Court also heard
oral argument regarding defendants’ motions for dismissal of the money
laundering counts. For the reasons
that follow, defendants’ motions are granted in part and denied in
part. I.
BACKGROUND A. The
Government’s Allegations On July 10,
1997, a grand jury indicted twenty-one defendants on various counts of a
seven-count superseding indictment, alleging that defendants smuggled tobacco
and liquor products from the United States to Canada across the St. Regis
Mohawk Indian Reservation (“Reservation”). The smuggling
scheme, according to the indictment, was designed to avoid the payment of
duties and taxes levied upon the importation of tobacco and liquor products by
Canada. The
Reservation, consisting of a six-by-five mile strip of land straddling the
international border between the State of New York and the Canadian provinces
of Ontario and Quebec, allegedly acted as the conduit for the smuggling
operation due to its unique geography. The government asserts that the
smuggling scheme operated by certain defendants purchasing imported Canadian-
brand tobacco products from Canadian distributors. The tobacco was then shipped
from Canada to locations in Western New York. Certain defendants, according to
the government, then transported the tobacco to warehouses operated by other
defendants on the Reservation. The government alleges that defendants crafted
fictitious invoices to conceal the delivery of the tobacco to the Reservation.
FN2. The
government alleges that defendants smuggled liquor products from the United
States to Canada through the Reservation in the same manner. According to
the government, Reports of Financial Transactions Exceeding $10,000 in the
Course Of A Trade or Business (8300 forms) were neither prepared nor filed in
connection with the scheme, preventing the Internal Revenue Service (IRS) from
assessing or collecting taxes. The government also asserts that neither
Currency Transaction Reports (CTRs) nor Reports of Currency or Monetary
Instruments in Excess of $10,000 Crossing the Border (CMIRs) were prepared or
filed. Furthermore,
the government contends that the smuggling scheme generated huge profits in
Canadian currency, necessitating defendants to devise an illegal currency
exchange/money laundering operation. Specifically, the Canadian currency is
alleged to have been exchanged and/or deposited to purchase bank drafts or wire
transfers, which were then used to pay for additional products, thereby
promoting the smuggling operation. B. The
Superseding Indictment The
above-described allegations form the basis for the seven-count superseding
indictment (the “indictment”). Counts one,
four and six charge dual-object conspiracies violating 18 U.S.C.
§ 371. They are based upon the alleged agreement to (1) aid
and abet those engaged in the outbound smuggling of tobacco and liquor
products, see 18 U.S.C. § 546; and (2) conduct the underlying
transactions without preparing the required forms, and recording or reporting
the underlying transactions. Counts two,
three and five charge money-laundering conspiracies violating 18 U.S.C.
§ 1956(a)(1)(A) and (h). They are based upon the alleged
money- laundering agreement and smuggling operation. [*420] Count seven is a racketeering
count charging defendants L. David Jacobs and Anthony Laughing with extortion,
bribery, and the operation of an illegal gaming business. See 18 U.S.C.
§ 1955(a), 1961(1)(4) & (5), 1962(c); N.Y. PENAL LAW
§ 155.05(2)(e)(viii), 200.10, 225.30(1-3). Lastly, the
indictment alleges forfeiture of cash and property, including: (i)
$557,677,994.63 in cash representing the amount laundered as charged in Count
two; (ii) $79,672,469.62 in cash representing the amount laundered as charged
in Count three; (iii) $50,103,128.97 in cash representing the amount laundered
as charged in Count five; (iv) $185,000.00 in cash representing proceeds
obtained from the racketeering activity charged in Count seven; and (v)
assorted real and personal property of defendants. II.
DISCUSSION Presently
before the Court are motions by defendants seeking the following relief: (1) an
order striking surplusage from the indictment; (2) dismissal of the indictment;
and (3) the return of seized property. The Court will address defendants’
motions seriatim. A.
Surplusage Defendants move
to strike various words and paragraphs in the indictment as improper and
prejudicial surplusage. “The court on motion of the defendant may
strike surplusage from the indictment or information.” FED. R. CRIM.
P. 7(d). The purpose of Rule 7(d) is to protect the defendant against
prejudicial allegations of irrelevant facts. The decision to strike, however,
is within the discretion of the trial court. U.S. v. Courtney, 257 F.2d 944, 947 (2d Cir.1958), cert.
denied, 358 U.S. 929, 79 S.Ct. 316, 3 L.Ed.2d 303 (1959). Motions to strike
will be granted only when the challenged allegations are “not relevant
to the crime charged and are inflammatory and prejudicial.” United
States v. Scarpa, 913
F.2d 993, 1013 (2d Cir.1990) (internal quotations omitted). “This is a
rather exacting standard, and only rarely has surplusage been ordered
stricken.” 1 CHARLES A. WRIGHT, FEDERAL PRACTICE AND PROCEDURE:
CRIMINAL 2D § 127, at 426-27 (1982). The test is not
simply whether the words in the indictment are prejudicial; rather, to warrant
their removal the language must be irrelevant to the crime charged. See United
States v. DePalma, 461
F.Supp. 778, 797 n. 26 (S.D.N.Y.1978). “ ‘If
evidence of the allegation is admissible and relevant to the charge, then
regardless of how prejudicial the language is, it may not be
stricken.’ “Scarpa, 913 F.2d at 1013 (quoting DePalma, 461 F.Supp. at 797). In the present
case, defendants challenge a number of phrases. First, they move to strike
paragraph two of the preamble of the indictment, which states: During the late
1980s and early 1990s, there were numerous confrontations between members of
the New York State Police and armed members of a paramilitary group known as
the “Warriors Society.” According to
defendants, this paragraph is both irrelevant and highly inflammatory. The
government counters that it informs of the unique characteristics of the Reservation,
which was essential to the smuggling scheme’s creation and success. Defendants’
argument is more persuasive; there is no relevancy between the alleged
commercial smuggling of cigarettes and tobacco and the “numerous
confrontations” between a “paramilitary group” and
law enforcement. The paragraph also is highly prejudicial; it improperly
implies defendants involvement in uncharged acts of violence. See United States v. Gatto, 746 F.Supp. 432, 458 (D.N.J.1990) (“The
preamble should not contain information beyond what is alleged in the counts,
nor should it contain terminology that carries with it connotations of culpable
behavior.”), rev’d on other grounds, 924 F.2d 491 (3d
Cir.1991); United States v. Hubbard, 474 F.Supp. 64, 83 (D.D.C.1979) (striking from
indictment uncharged reference to confrontation between Federal Bureau of
Investigation and alleged members of Church of Scientology); see also United
States v. Abel, 258
F.2d 485, 501 (2d Cir.1958), aff’d, 362 [*421]
U.S. 217, 80 S.Ct. 683, 4 L.Ed.2d 668 (1960). Accordingly, paragraph two is
stricken from the indictment. Second,
defendants challenge as surplusage paragraph five of the preamble of the
indictment, which provides: This smuggling
activity was well known within the community and has been the subject of
newspaper articles, magazine articles, and television broadcasts. Defendants
argue that this paragraph is unnecessary to the proof of any material element
of the crimes charged. As noted by the
government, however, this paragraph is relevant to the issue of
defendants’ intent. Specifically, it provides circumstantial evidence
that defendants knew their related activities were part of an unlawful
smuggling scheme and that the alleged currency they used to conduct their
financial transactions were the proceeds of the scheme. [FN3] Thus, paragraph
five of the preamble stands. Lastly,
defendants challenge the words “[t]he original,”
“[t]he Lewis and Robert Tavano,” and “[t]he Pine
Partnership” in the captions of Counts one, four and five of the
indictment, respectively. Defendants argue that not only are these labels
unnecessary to prove any the charged crimes, but the jury may view them as more
culpable as a consequence. These
descriptive titles, however, merely mirror the proof that the government
asserts it will present at trial—namely, that the conspiracy charged
in Count one is in fact the “original” conspiracy, that the
conspiracy charged in Count four was led by Lewis and Robert Tavano, and that
the conspiracy charged in Count five revolved around the activities of the Pine
Partnership. “Courts have consistently refused to strike language in
indictments that identified the name of the criminal enterprise
….” United States v. Elson, 968 F.Supp. 900, 909 (S.D.N.Y.1997); see also United
States v. Vastola, 899
F.2d 211, 232 (3rd Cir.1990), vacated on other grounds, 497 U.S. 1001, 110
S.Ct. 3233, 111 L.Ed.2d 744 (1990). Any concern of prejudice arising from the
labels can be cured by a cautionary instruction to the jury not to consider
either the name or order of the conspiracies as evidence of any
defendant’s guilt. See Vastola, 899 F.2d at 232. Therefore, these phrases stand. B. Dismissal
of the Indictment 1. Counts
One, Four and Six A number of
defendants seek dismissal of Counts one, four and six of the indictment on
various grounds. Counts one,
four and six allege that defendants participated in three interrelated
dual-object conspiracies, each in violation of 18 U.S.C.
§ 371. [FN4] The first object of the conspiracies, according
to the indictment, was to aid and abet outbound smuggling, in violation of 18
U.S.C. § 546. [FN5] The second object [*422] of the conspiracies, according to the
indictment, was to defraud the U.S. and its agencies, specifically (i) the
Bureau of Alcohol, Tobacco and Firearms (ATF) in the regulation of liquor
transactions; (ii) the Internal Revenue Service (IRS) in the assessment and
collection of taxes and revenue; and (iii) the United States Customs Service
and IRS, in collecting data and recording currency transactions in amounts
exceeding $10,000 for the purpose of investigating violations of the criminal
laws. FN4. Section 371 provides, in pertinent part: If two or more persons conspire either to commit
offense against the United States, or to defraud the United States, or any
agency thereof in any manner or for any purpose, and one or more of such
persons do any act to effect the object of the conspiracy, each shall be fined
… or imprisoned not more than five years, or both. 18 U.S.C. § 371 (Supp.1998). FN5. Section 546 provides, in pertinent part: Any person owning in whole or in part any vessel of
the United States who employs, or participates in, or allows the employment of,
such vessel for the purpose of smuggling, or attempting to smuggle, or
assisting in smuggling, any merchandise into the territory of any foreign
government in violation of the laws there in force, if under the laws of such
foreign government any penalty of forfeiture is provided for violation of the
laws of the United States respecting the customs revenue, … shall be
fined or imprisoned not more than two years, or both. 18 U.S.C. § 546 (Supp.1998). The Court now
turns to the various dismissal motions of defendants with respect to Counts
one, four and six. a.
Multiplicity Defendants
Robert and Lewis Tavanos and Larry and Dana Leigh Thompson contend that Counts
one and four of the indictment are multiplicitous. A
multiplicitous indictment “charges in separate counts two or more
crimes, when in fact and law, only one crime has been committed.” United
States v. Holmes, 44
F.3d 1150, 1153-54 (2d Cir.1995); United States v. Maldonado-Rivera, 922 F.2d 934, 969 (2d Cir.1990), cert.
denied, 501 U.S. 1211, 111 S.Ct. 2811, 115 L.Ed.2d 984 (1991). “The
doctrine of multiplicity ‘is based upon the double jeopardy clause of
the Fifth Amendment, which assures that the court does not exceed its
legislative authorization by imposing multiple punishments for the same
offense.’ ” United States v. Harris, 79 F.3d 223, 231 (2d Cir.), cert.
denied, 519 U.S. 851, 117 S.Ct. 142, 136 L.Ed.2d 89 (1996) (quoting United
States v. Fiore, 821
F.2d 127, 130 (2d Cir.1987)). To determine
whether multiple conspiracy counts alleged in an indictment are, in fact, a
single conspiracy, the Court must examine the “totality of the
circumstances.” United States v. Korfant, 771 F.2d 660, 662 (2d Cir.1985); United
States v. Urlacher, 784
F.Supp. 61, 64 n. 1 (W.D.N.Y.1992), aff’d, 979 F.2d 935 (2d Cir.1992).
This requires consideration of a variety of factors, which together aid in
determining whether the conspiracies are individuated. See Korfant, 771 F.2d at 662.
“ ‘[O]nce a defendant introduces sufficient evidence
that the two conspiracies alleged were in fact one, the burden shifts to the
government to rebut the inference of unity.’ ” United
States v. Abbamonte,
759 F.2d 1065, 1069 (2d Cir.1985) (quoting United States v. Papa, 533 F.2d 815, 820-23 (2d Cir.), cert.
denied, 429 U.S. 961, 97 S.Ct. 387, 50 L.Ed.2d 329 (1976)). As evidence of
multiplicity, defendants point to the following: Counts one and four share a
violation of the same federal criminal statute, 18 U.S.C.
§ 371; all the conspirators alleged in Count four are alleged
to have been members of the conspiracy charged in Count one; there is
substantial overlap in time between the alleged conspiracies; the alleged
conspiracies operated in largely the same manner; the overt acts alleged to support
the conspiracies are largely the same; the geographic location of the alleged
conspiracies are substantially the same; and both conspiracies allege the same
objects of the conspiracy. The government,
in turn, contends that defendants engaged in two separate, but related,
conspiracies. Count one, according to the government, alleges
defendants’ participation in a conspiracy to defraud the United States
that involved Larry Miller. By contrast, Count four, according to the
government, alleges a separate conspiracy that existed simultaneously with and
after the conspiracy charged in Count one. The government also maintains that
the multiplicity claim is not ripe, arguing that the Court should have the
benefit of hearing the evidence before determining whether the counts are
multiplicitous. The threshold
issue is thus a timing one: whether defendants multiplicity claim should be
addressed pre-trial or after the presentation of evidence. On the one
hand, if an indictment is multiplicitous on its face, then the multiplicitous
count(s) should be dismissed pre-trial. See United States v. Reed, 639 F.2d 896, 904 (2d Cir.1981). On
the other hand, “[w]hether an aggregate of acts constitute a single
course of conduct and therefore a single offense, or more than one, may not be
capable of ascertainment merely from the bare allegations of an information and
may have to [*423] await the trial on the facts.” United
States v. Universal C.I.T. Credit Corp., 344 U.S. 218, 224, 73
S.Ct. 227, 97 L.Ed. 260 (1952) ( “Universal “); see also United
States v. Walker, 524
F.Supp. 1029, 1030 (E.D.Pa.1981) (concluding that multiplicity claim not ripe
at pre-trial stage because of lack of developed record); United States v.
Stofsky, 409 F.Supp.
609, 617-18 (S.D.N.Y.1973) (discussing ripeness concerns). The
multiplicity issue in this case is not ripe. First, the indictment is not
multiplicitous on its face. Count one alleges a conspiracy involving Larry
Miller. Count four, by contrast, alleges a separate conspiracy that existed
during and after the conspiracy charged in Count one. Second, the
Court has before it no evidence regarding the alleged § 371
conspiracies. Defendants’ speculation of what the evidence will be is
unconvincing. Based upon the current record, an intelligent review of the
multiplicity issue cannot be made. See Universal, 344 U.S. at 224, 73 S.Ct. 227; Stofsky, 409 F.Supp. at 617-18; Walker, 524 F.Supp. at 1030. The importance of
having a fully-developed record here is critical for two reasons: first, and
more generally, an evaluation of various factors is a fact-intensive inquiry;
and second, and more specifically, this case is a complex one. Although
additional evidence concerning the alleged § 371 conspiracies
may result in a finding that the counts are multiplicitous, that determination
cannot now be made. If the defendants introduce sufficient evidence at trial
that the separate conspiracies alleged were, in fact, one, then the government
will be ordered to “elect among the multiplicitous counts, with all
but the one elected dismissed.” See Reed, 639 F.2d at 904 n. 6; United States
v. Ketchum, 320 F.2d 3,
7-8 (2d Cir.), cert. denied, 375 U.S. 905, 84 S.Ct. 194, 11 L.Ed.2d 145 (1963). Defendants’
concerns that the mere making of multiple conspiracy charges may have some
psychological effect upon the jury, see Reed, 639 F.2d at 904 (recognizing that prolix pleading
may prejudice the jury “by suggesting that a defendant has committed
not one but several crimes”), must yield here to the countervailing
considerations of ripeness. A curative instruction can help remove any
potential for prejudice stemming from the jury’s awareness of the
multi-charge indictment. See United States v. Cervone, 1988 WL 155641, at *9 (E.D.N.Y. May
18, 1988), aff’d, 907 F.2d 332 (1990). Accordingly,
defendants’ motions to dismiss Counts one or four based on
multiplicity grounds are denied without prejudice to renew the motions after
the close of the government’s case or after the close of the entire
case. See FED. R. CRIM P. 29. b. Duplicity Larry Thompson
and Dana Leigh Thompson next move to dismiss Counts one, two and four as
duplicitous, arguing that each count charges more than one conspiracy. “An
indictment is duplicitous if it joins two or more distinct crimes in a single
count.” United States v. Aracri, 968 F.2d 1512, 1518 (2d Cir.1992) (citing United
States v. Murray, 618
F.2d 892, 896 (2d Cir.1980)). The policy reasons against duplicitous
indictments “include avoiding the uncertainty of whether a general
verdict of guilty conceals a finding of guilty as to one crime and a finding of
not guilty as to another, avoiding the risk that the jurors may not have been
unanimous as to any one of the crimes charged, assuring the defendant adequate
notice, providing the basis for appropriate sentencing, and protecting against
double jeopardy in a subsequent prosecution.” Aracri, 968 F.2d at 1518 (citations omitted).
An indictment, therefore, may not charge multiple conspiracies in a single
count. Id. A single
conspiracy, however, may have multiple objects because the single conspiracy is
the crime, not its diverse objects. Id.; United States v. Ballistrea, 101 F.3d 827, 835 (2d Cir.1996), cert.
denied, 520 U.S. 1150, 117 S.Ct. 1327, 137 L.Ed.2d 488 (1997). In this case,
defendants do not take issue—as they cannot—with each of
Counts one and four charging a dual-object conspiracy. They contend, instead,
that each count fails to allege a single conspiracy among the defendants who
operated the warehouses on the Reservation. Defendants’ argument runs
that to charge a single conspiracy in [*424]
each count, there must be an allegation in each count that the warehouse and
facility operators acted interdependently. According to defendants, because
there is no allegation of interdependence among the warehouse operators, each
count actually alleges a number of smaller—and thus
duplicitous—chain conspiracies. After reviewing
Count one of the indictment, it is evident that the essence of this Count is a
single conspiracy both to engage in the outbound smuggling of tobacco and
liquor products and to defraud the U.S. and its government agencies. Count one
alleges a series of overt acts taken by the defendants in furtherance of the
charged single conspiracy; it is not duplicitous on its face. See Aracri, 968 F.2d at 1518-19; United States
v. Tutino, 883 F.2d 1125,
1141 (2d Cir.1989) (“[A]cts that could be charged as separate counts
of an indictment may instead be charged in a single count if those acts could
be characterized as part of a single continuing scheme”), cert.
denied, 493 U.S. 1081, 110 S.Ct. 1139, 107 L.Ed.2d 1044 (1990). Neither are
Counts two or four duplicitous. See Aracri, 968 F.2d at 1518-19. Rather, like Count one, the
bedrock of those counts is a series of overt acts in support of their
respective single conspiracy charges. Whether the
proof at trial establishes a single conspiracy or multiple conspiracies is a
question of fact for a properly instructed jury. See, e.g., id. The Court recognizes that a
“multiple conspiracy charge” is appropriate here, and will
instruct the jury that they must acquit each defendant unless they find him
guilty of the conspiracy charged in the indictment. Id. at 1519. Accordingly,
defendants Larry and Dana Leigh Thompson’s motion to dismiss Counts
one, two and four on duplicity grounds is denied. c. 18 U.S.C.
§ 546 Defendants next
seek dismissal of the alleged violation of 18 U.S.C. § 546 as
an object of the section 371 conspiracies charged in Counts one, four and six.
They assert that: (1) the indictment is defective because it does not allege a
material element of the charged section 546 violation; (2) the government
cannot allege a reciprocal Canadian statute as required under section 546; and
(3) section 546 is unconstitutionally vague as applied to the defendants’
conduct. Section 546,
which generally prohibits the smuggling of goods into foreign countries,
provides, in pertinent part, as follows: Any person owning in whole or in part any vessel of
the United States who employs, or participates in, or allows the employment of,
such vessel for the purpose of smuggling, or attempting to smuggle, or
assisting in smuggling, any merchandise into the territory of any foreign
government in violation of the laws there in force, if under the laws of such
foreign government any penalty of forfeiture is provided for violation of the
laws of the United States respecting the customs revenue, … shall be
fined or imprisoned not more than two years, or both. 18 U.S.C.
§ 546 (emphasis supplied). Section 546 contains a reciprocity
element: the government must show that the foreign country into which
defendants have smuggled, attempted to smuggle, or assisted in smuggling, any
merchandise, makes it a “penalty or forfeiture” for a
violation there of the laws of the United States respecting customs revenue. Defendants
attack the sufficiency of the indictment on the ground that it does not allege
a reciprocal Canadian law that penalizes individuals in Canada for smuggling
goods into the United States without paying United States customs duties. They
also posit that the government’s filing of a bill of particulars,
which expresses the government’s intention to rely upon Section 465(3)
of the Canadian Criminal Code, does not remedy the violation of the
defendants’ Fifth and Sixth Amendment’s rights to a proper
indictment by the grand jury. Defendants’
argument presents the question whether an indictment that charges a dual-object
conspiracy is required to allege the material elements of each of the
underlying object offenses. It is firmly
established that “[c]onvictions are no longer reversed because of
[*425] minor and technical
deficiencies which did not prejudice the accused.” See, e.g., Smith
v. United States, 360 U.S. 1, 9, 79 S.Ct. 991,
3 L.Ed.2d 1041 (1959) (citations omitted). Instead, “[i]ndictments are
now reviewed for constitutional infirmities, most notably whether the alleged
defect offends the Sixth Amendment right of the accused to be informed of the
charges against him, [or] the Fifth Amendment right not to be prosecuted
without indictment by a grand jury.” United States v. Wydermyer, 51 F.3d 319, 324 (2d Cir.1995)
(citations omitted). The Second Circuit has
“ ‘consistently sustained indictments which tracked
the language the statute and, in addition, do little more than state time and
place in approximate terms.’ ” United States v.
Trotta, 525 F.2d 1096,
1098-99 (2d Cir.1975), cert. denied, 425 U.S. 971, 96 S.Ct. 2167, 48 L.Ed.2d
794 (1976) (quoting United States v. Salazar, 485 F.2d 1272, 1277 (2d Cir.), cert. denied, 415
U.S. 985, 94 S.Ct. 1579, 39 L.Ed.2d 882 (1974)). Furthermore, a conspiracy
indictment need not contain the same level of specificity and detail of an
indictment alleging a substantive offense. Wong Tai v. United States, 273 U.S. 77, 81, 47 S.Ct.
300, 71 L.Ed. 545 (1927). In the seminal
case of Wong Tai,
the Supreme Court stated: “[i]t is well settled that in an indictment
for conspiring to commit an offense—in which the conspiracy is the
gist of the crime—it is not necessary to allege with technical
precision all the elements essential to the commission of the offense which is
the object of the conspiracy.” 273 U.S. at 81, 47 S.Ct. 300.
“The rationale is that the crime of conspiracy is complete whether or
not the substantive offense which was its object was committed. The indictment
need only put the defendants on notice that they are being charged with a
conspiracy to commit the underlying offense, or … apprise the grand
jury in essential terms of the object of the conspiracy.” Wydermyer, 51 F.3d at 325. The instant
conspiracy indictment satisfies these standards. It charges defendants, in
pertinent part, with knowingly and intentionally conspiring “to aid
and abet individuals who own in whole or in part a vessel of the United States,
and who employ, and participate in the employment of such vessel for the
purposes of smuggling, and attempting to smuggle, and assisting in smuggling,
tobacco and liquor into the territory of Canada, in violation of the laws there
in force, in violation of [18 U.S.C. § 546].” See
indictment at 4-5. The indictment also alleges a series of overt acts committed
by defendants in furtherance of the conspiracy. Id. In short, the indictment both
“tracks” the statutory language and adequately informs the
defendants of the charges against them. See Trotta, 525 F.2d at 1098-99. Taken as a whole,
it sufficiently informed the grand jury of the object offense. The indictment
need not allege all the elements of the predicate offense—that is, a
reciprocal Canadian statute. See United States v. Werme, 939 F.2d 108, 112 (3d Cir.1991)
(“An indictment charging a conspiracy under 18 U.S.C.
§ 371 need not specifically plead all of the elements of the
underlying substantive offense.”), cert. denied, 502 U.S. 1092, 112
S.Ct. 1165, 117 L.Ed.2d 412 (1992). Defendants next
argue that even assuming the indictment is not defective, the
§ 546 predicate offense must be dismissed because there does
not exist, as a matter of law, a reciprocal Canadian statute that can trigger
its application. As noted, for
§ 546 to apply, the government must establish that Canada
makes it a “penalty or forfeiture” for a violation there of
the laws of the United States respecting customs revenue. The government relies
upon section 465(3) of the Canadian Criminal Code. [FN6] See
Government’s Bill of Particulars [*426]
at 1. Section 465(3) provides that a conspiracy in Canada to do anything
described in § 465(1) outside Canada that is an offense in
such place is a conspiracy to do that thing in Canada. However,
§ 465(3) is self-limiting; it only applies when the object of
the conspiracy is an offense both in Canada and in the country where the
offense is to occur. See Bolduc v. Attorney-General of Ouebec et al., 68 C.C.C.(2d) 413, 418 (S.Ct. of
Canada 1982). FN6. Section 465(3) provides as follows: (3) Every one who, while in Canada, conspires with
any one to do anything referred to in subsection (1) in a place outside Canada
that is an offense under the laws of that place shall be deemed to have
conspired to do that thing in Canada. Subsection (1), in turn, provides that: (1) Except where otherwise expressly provided by
law, the following provisions apply in respect of conspiracy: (a) every one who conspires to commit murder or to
cause another person to be murdered, whether in Canada or not, is guilty of an
indictable offence and liable to a maximum term of imprisonment for life; (b) every one who conspires with any one to
prosecute a person for an alleged offense, knowing that he did not commit that
offence, is guilty of an indictable offence and liable … (c) every one who conspires with any one to commit
an indictable offence not provided for in paragraph (a) or (b) is guilty of an
indictable offence and liable to the same punishment as that to which an
accused who is guilty of that offence would, on conviction, be liable; and (d) every one who conspires with any one to commit
an offence punishable on summary conviction is guilty of an offence punishable
on summary conviction. In Bolduc, the Canadian government prosecuted a
French Canadian under the predecessor statute of section 465(3), [FN7]
asserting that the defendant had conspired to transport people into the United
States in violation of U.S. immigration law. Defendant argued against
application section 465(3). The Canadian Supreme Court made two critical
points: first, for section 465(3) to apply, the object of the conspiracy must
be an offense “both in Canada and in the country where the
conspirators intend to carry it out”; and second, “[t]he
identity of offences must be understood as identity of their essential
elements, so that the act, if committed in Canada, would constitute an offence
in Canada.” Id.
at 418-19. The Bolduc court held that, because the object of the
offense—to effect an illegal entry—was a crime in both the
United States and Canada, defendants could be prosecuted for conspiracy under
section 465(3). Id.
at 420. FN7. Section 465(3) mirrors its predecessor
statute, § 423(3), which provided that: Every one who, while in Canada, conspires with any
one to do anything referred in subsection (1) or (2) in a place outside Canada
that is an offence under the laws of that place shall be deemed to have
conspired to do in Canada that thing. Applying both
section 465(3) and the teachings of Bolduc here, it is plain that Canadian Criminal Code
section 465(3) does not satisfy the reciprocity requirement of 18 U.S.C.
§ 546. For section 465(3) to punish outbound smuggling from
the United States, Canada must make outbound smuggling from Canada an offense
under Canadian law. As the government cites to no Canadian law that punishes
outbound smuggling, it cannot rely on section 465(3) to satisfy reciprocity
under 18 U.S.C. § 546. Accordingly,
Counts one, four and six are dismissed insofar as each alleges a conspiracy to
violate 18 U.S.C. § 546. 2. Counts Two,
Three and Five of the Indictment Counts two, three and five of the indictment
charge conspiracies violating 18 U.S.C. § 1956(a)(1)(A) and
(h). They are based on the alleged money laundering agreement and smuggling
operation. Specifically, the government alleges that the smuggling operation
generated huge amounts of profits in Canadian currency. The Canadian currency,
in turn, is alleged to have necessitated a currency exchange/money laundering
operation. That is, Canadian currency generated from the alleged illegal-tax-free
sale of tobacco and liquor products on the Canadian black market had to be
exchanged and/or deposited to purchase bank drafts or wire transfers, which
were used to pay for additional goods, thereby promoting the smuggling
operation. The agreement to conduct these financial transactions is the essence
of the money-laundering conspiracies. The
money-laundering conspiracy statute, 18 U.S.C. § 1956(h),
provides as follows: Any person who
conspires to commit any offense defined in this section … shall be
subject to the same penalties as those prescribed for the offense the
commission of which was the object of the conspiracy. Here, the
government charges as the object offense 18 U.S.C.
§ 1956(a)(1)(A)(i), which provides that: (a)(1) Whoever, knowing that the property involved
in a financial transaction represents [*427]
the proceeds of a specified unlawful activity, conducts or attempts to conduct
such a financial transaction which in fact involves the proceeds of specified unlawful
activity— (A)(i) with the intent to promote the carrying on
of specified unlawful activity … shall be sentenced to a fine of not more than
$500,000 or twice the value of the property involved in the transaction,
whichever is greater, or imprisonment for not more than twenty years, or both. (emphasis
added). Section 1956(c)(7) defines “specified unlawful
activity” as any offense listed in that subsection or in 18 U.S.C.
§ 1961(1). 18 U.S.C. § 1956(c)(7). Here,
the government charges wire fraud under 18 U.S.C. § 1343 as
the “specified unlawful activity.” Wire fraud is considered a
“specified unlawful activity.” See 18 U.S.C.
§ 1961(1). The term “proceeds” is not
defined by statute. Defendants
advance four principal arguments for dismissal of the money- laundering
conspiracy counts: (1) Indian sovereignty; (2) the Jay Treaty; (3) failure by
the government to alleged a legally cognizable claim of money laundering; and
(4) the revenue rule. a. Indian
Sovereignty Defendants
challenge the exercise of federal criminal jurisdiction with sweeping
assertions of Indian sovereignty. “Although
physically within the territory of the United States and subject to ultimate
federal control, [Indian country such as the Reservation] nonetheless remain
‘a separate people, with the power of regulating their internal and
social relations.’ ” United States v. Wheeler, 435 U.S. 313, 322, 98
S.Ct. 1079, 55 L.Ed.2d 303 (1978) (quoting United States v. Kagama, 118 U.S. 375, 381-82, 6
S.Ct. 1109, 30 L.Ed. 228 (1886)); United States v. Cook, 922 F.2d 1026, 1030-31 (2d Cir.1991).
However, “[t]heir incorporation within the territory of the United
States, and their acceptance of its protection, necessarily divested them of
some aspects of the sovereignty which they had previously exercised.” Wheeler, 435 U.S. at 323, 98 S.Ct. 1079.
“The sovereignty that the Indian tribes retain is of a unique and
limited character. It exists only at the sufferance of Congress and is subject
to complete defeasance…. In sum, Indian tribes still possess those
aspects of sovereignty not withdrawn by treaty or statute, or by implication as
a necessary result of their dependent status.” id. Generally,
absent some federal jurisdictional hook, there is no federal criminal
jurisdiction over Indians in Indian country. [FN8] See 18 U.S.C.
§§ 1152 [FN9] and 1153; [FN10] United States v.
Markiewicz, 978 F.2d
786, 797 (2d Cir.1992). The three basic hooks for federal criminal jurisdiction
are: (1) the Federal Enclave Act (“FEA”), 18 U.S.C.
§ 1152; (2) the Major Crimes Act (“MCA”),
18 U.S.C. § 1153; and (3) “peculiarly Federal crimes
… the prosecution of [which] … would protect an independent
federal interest.” Markiewicz, 978 F.2d at 799-800; see also [*428] Wheeler, 435 U.S. at 331 nn. 30 & 32, 98 S.Ct. 1079. FN8. The term “Indian country” is
defined as (a) all land within the limits of any Indian
reservation under the jurisdiction of the United States Government, notwithstanding
the issuance of any patent, and, including rights-of-way running through the
reservation, (b) all dependent Indian communities within the borders of the
United States whether within the original or subsequently acquired territory
thereof, and whether within or without the limits of a state, and (c) all
Indian allotments, the Indian titles to which have not been extinguished,
including rights-of-way running through the same. 18 U.S.C.
§ 1151. FN9. Section 1152 provides: Except as otherwise expressly provided by law, the
general laws of the United States as to the punishment of offenses committed in
any place within the sole and exclusive jurisdiction of the United States,
except the District of Columbia, shall extend to the Indian country. This
section shall not extend to offenses committed by one Indian against the person
or property of another Indian, nor to any Indian committing any offense in the
Indian country who has been punished by the local law of the tribe, or to any
case where, by treaty stipulation, the exclusive jurisdiction over such
offenses is or may be secured to the Indian tribes respectively. 18 U.S.C. § 1152. FN10. Section 1153 conferred federal court
jurisdiction over enumerated Indian-against-Indian “major”
offenses committed on Indian territory. See 18 U.S.C. § 1153. In this case,
defendants assert that federal criminal jurisdiction does not extend to the
charge of money-laundering conspiracy because it is neither an enumerated crime
under the FEA nor the MCA, and the government has not demonstrated that it is a
peculiar federal crime the prosecution of which would protect an independent
federal interest. Defendants’
argument, however, overlooks several lynchpins to successful claims of Indian
sovereignty. First, for jurisdiction to be at issue, it is axiomatic that the
offense must have been committed by an Indian. See 18 U.S.C.
§ 1152. Here, the non-Indian defendants cannot assert that
the Court lacks federal criminal jurisdiction based upon the sovereignty rights
of the members of the Reservation. id. Second, the
issue of federal criminal jurisdiction arises only when the offense occurred
within Indian country. See 18 U.S.C. § 1152; Markiewicz, 978 F.2d at 797, 801 (citations
omitted). Here, defendants ignore that each of the money-laundering conspiracy
counts charge them with participating in financial transactions that involved
property constituting the proceeds of specified unlawful activity (i.e., wire
fraud). Specifically, the indictment alleges that the products were transported
from the Reservation into Canada and then sold on the black market. It also
charges that defendants made numerous interstate and international phone calls
and that they conducted financial transactions at banks located in the State of
New York involving property constituting the proceeds of the wire fraud scheme.
Thus, to the extent the offenses occurred outside the Reservation, defendants
cannot claim that the Court lacks jurisdiction over the charged
money-laundering conspiracies. See Markiewicz, 978 F.2d at 801-02. Third, even to
the extent that Reservation sovereignty is properly before us, it must give way
to federal interests in preventing money laundering involving a scheme to
defraud the United States. See Markiewicz, 978 F.2d at 799 (recognizing that “there
is federal jurisdiction when the offense is one such as … defrauding
the United States “ even when offense is intra-Indian on Indian
country that is not enumerated under 18 U.S.C. § 1153)
(emphasis added); United States v. Wadena, 152 F.3d 831, 841-42 (8th Cir.1998); see also Federal
Power Comm’n v. Tuscarora Indian Nation, 362
U.S. 99, 116, 80 S.Ct. 543, 4 L.Ed.2d 584 (1960) (“[I]t is now
well settled by many decisions of this Court that a general statute in terms
applying to all persons includes Indians and their property
interests”). Contrary to defendants’ suggestion, the
indictment does not serve solely to advance Canadian interests. The government
charges that defendants defrauded and impeded the operation of agencies of the
United States, specifically: (i) the IRS in the assessment and collection of
taxes and revenue; and (ii) the United States Customs Service and IRS, in
collecting data and recording currency transactions in amounts exceeding
$10,000 for the purpose of investigating violations of the criminal laws. A
strong federal interest also is present in preserving the integrity of our
telecommunications and banking industries by preventing them from becoming the
instrumentalities for criminal activity both here and abroad. Other federal
interests include preventing the Reservation from becoming a haven for smugglers
and ensuring the public safety within and without the Reservation.
b. The Jay
Treaty
Accordingly,
this Court will not “revive the duty exemption which history and the
law have firmly ended.” See Akins, 551 F.2d at 1230. c. Proceeds Defendants next
contend that the government has not alleged a legally cognizable theory of money
laundering conspiracy because the charged specified unlawful
activity—the wire fraud scheme to defraud the U.S. and Canadian
governments of tax revenue—did not generate any
“proceeds.” See 18 U.S.C. §§ 1956(a)(1)(A)(i),
1956(h). Specifically, defendants assert that the purpose and result of the
alleged wire fraud scheme of tax evasion was not to generate proceeds (or
“dirty” laundered money) from the sale of liquor and tobacco,
but rather, avoiding the payment of “clean money” to the
United States and Canadian governments. They correctly note that tax evasion is
conspicuously absent from the enumerated list of specified unlawful activities.
See 18 U.S.C. § 1956(a)(1)(A); 1956(c)(7). In short, they
accuse the government of creative charging; that is, attempting to do through
the back door of the wire fraud statute what it is precluded from doing through
the front door. Although
defendants’ argument is not without some attraction, it is in the end
unpersuasive. Admittedly, there is some tension, illustrated by this
prosecution, between Congress’ decision to include the mail and wire
statute [FN11] as a specified unlawful activity and to exclude tax evasion. FN11. The wire fraud statute provides: Whoever, having devised or intending to devise any scheme or artifice to
defraud, or for obtaining money or property by means of false or fraudulent
pretenses, representations or promises, transmits or causes to be transmitted
by means of wire … communication in interstate or foreign commerce,
any writings, signs, signals, pictures, or sounds for the purpose of executing
such scheme or artifice, shall be fined under this title or imprisoned not more
than five years, or both. 18 U.S.C. § 1343. The Second
Circuit, in United States v. Eisen, 974 F.2d 246, 253-54 (2d Cir.1992), cert. denied,
507 U.S. 1029, 113 S.Ct. 1840, 123 L.Ed.2d 467 (1993), confronted an analogous
situation under the Racketeer Influenced and Corrupt Organizations Act (RICO).
In that case, defendant contended that allowing mail fraud based upon perjury
to serve as the predicate RICO offense conflicted with Congress’
intent in omitting perjury as an enumerated RICO predicate offense. In
rejecting defendant’s assertion, the court held that “where,
as here, a fraudulent scheme falls within the scope of the federal mail fraud
statute and the other elements of RICO are established, use of the mail fraud
offense as a RICO predicate act cannot be suspended simply because perjury is
part of the means for perpetrating the fraud.” Id. The court emphasized that it was not
the act of perjury alone that brought it within the purview of RICO. This reasoning
applies equally to our case, as it is not tax evasion alone that brings the
alleged conduct of defendants within the chargeable scope of money laundering;
rather, it is the alleged fraudulent scheme that falls within the scope of the
wire fraud statute and the other elements of the money laundering statute. Defendants also
overlook the great weight of precedent permitting the use of the mail and wire
fraud statute to reach wire fraud schemes whose aim is the evasion of federal
and state taxes. United States v. Dale, 991 F.2d 819, 849 (D.C.Cir.) (federal tax
revenues), cert. denied, 510 U.S. 906, 114 S.Ct. 286, 126 L.Ed.2d 236 (1993); United
States v. Helmsley, 941
F.2d 71, 93-95 (2d Cir.1991) (state income taxes), cert. denied, 502 U.S. 1091,
112 S.Ct. 1162, 117 L.Ed.2d 409 (1992); [*430]
United States v. Bucey,
876 F.2d 1297, 1309-10 (7th Cir.) (federal income taxes), cert. denied, 493
U.S. 1004, 110 S.Ct. 565, 107 L.Ed.2d 560 (1989); United States v. DeFiore, 720 F.2d 757, 761 (2d Cir.1983)
(federal and state taxes), cert. denied, 467 U.S. 1241, 104 S.Ct. 3511, 82
L.Ed.2d 820 (1984). But see United States v. Henderson, 386 F.Supp. 1048, 1052-54
(S.D.N.Y.1974). It is of no moment “whether the scheme [to defraud]
seeks to undermine a sovereign’s right to impose taxes, or involves
foreign victims and governments.” United States v. Trapilo, 130 F.3d 547, 552 (2d
Cir.1997). Furthermore,
defendants’ assertion of no proceeds lacks logical force as a factual
matter. Countless Canadian customers are alleged to have purchased the
defendants’ tax-free tobacco and liquor with Canadian currency, which
defendants converted into U.S. currency via bank transfers, thereby promoting
the wire fraud scheme. Thus, the black market sales generated the
“dirty money” or “proceeds” that formed the
basis for the financial transactions promoting the scheme. See United States
v. Trapilo, 130 F.3d 547, 549 n. 3 (2d
Cir.1997) (recognizing that “the act of smuggling … is an act
within the meaning of a ‘scheme to
defraud’ “). Lastly,
defendants’ belief that a tax evasion crime can never generate
proceeds under the money laundering statute is inconsistent with the other
sections of the statute. Congress defined “specified unlawful
activity” to include the offenses of 18 U.S.C.
§§ 542 and 545, which, respectively, criminalize the
making of false statements in connection with imported merchandise and the
smuggling of goods into the United States. Both have as their goal tax
avoidance. Thus, the money laundering statute itself enumerates other specified
unlawful activities that have the effect of tax avoidance. Accordingly,
the Court finds that the government has alleged a legally cognizable claim of
money-laundering conspiracy against defendants. d. The
Revenue Rule Lastly,
defendants argue that even if the wire fraud scheme generated
“proceeds,” the charges fail because the wire fraud scheme
does not reach the defendants here. Defendants rely on the First Circuit case
of Boots, 80 F.3d at 580. Boots is a case very much like ours. As here, the
defendants in Boots were charged with smuggling tobacco and liquor products
into Canada via the Reservation. The First Circuit held that defendants could
not be prosecuted under the mail and wire fraud act because such a scheme to
defraud the foreign government of tax revenues is outside the parameters of
frauds cognizable under the mail and wire fraud statute. This finding rested
largely on the revenue rule, which generally provides that courts will not
enforce foreign tax judgments. The First Circuit reasoned that because, at
heart, the smuggling scheme was designed to avoid the payment of Canadian
taxes, upholding the defendants’ convictions would amount functionally
to penal enforcement of Canadian customs and tax laws. The First Circuit noted
that to convict, our courts would be required to pass on whether a violation of
Canadian tax laws was intended and occurred. Accordingly, the First Circuit
reversed defendants’ convictions under the mail and wire fraud act. The Second
Circuit, however, rejected the reasoning of Boots in United States v. Trapilo, 130 F.3d 547 (2d Cir.1997). Trapilo, like here, involved the alleged
smuggling of liquor and tobacco products across the Reservation into Canada.
The one-count indictment charged a money-laundering conspiracy under 18 U.S.C.
§ 1956(h). In rejecting the district court’s
dismissal of the indictment in reliance upon Boots, Trapilo reasoned that the mail and wire fraud
statute condemns the intent to defraud, which “does not hinge on
whether or not the defendants were successful in violating Canadian tax revenue
laws.” Id.
at 552-53. Consequently, it found that there was no obligation to pass on the
validity of Canadian revenue law and the common law revenue rule. Trapilo has
foreclosed the defendants’ argument regarding the revenue rule.
Defendants attempt to distinguish Trapilo on the ground that this prosecution
charges § 546 offenses, thus further entangling the Court in
Canada’s tax laws beyond the Trapilo context, is unavailing in light of the dismissal
of the section 546 charges. [*431] 3. Asset Forfeiture a. John
Fountain Defendant John
Fountain seeks the pretrial release of “substitute assets”
seized by the government pursuant to warrants signed by the Magistrate Judge.
Fountain contends that (1) 18 U.S.C. § 982(b)(1)(A) does not
permit the pretrial restraint of substitute asserts, and (2) the assets he
seeks to have released are not owned by him, but rather by non-defendant third
parties. In the case of
a person convicted of a money laundering offense, 18 U.S.C.
§ 982(a)(1) mandates the criminal forfeiture of any property
that is “involved in” or “traceable to” to
such offense. The proceedings relating to property forfeited under § 982(a)(1)
are governed by 21 U.S.C. §§ 853(c) and (e) through
(p). 18 U.S.C. S 982(b)(1)(A). In arguing that
the pre-trial seizure of “substitute assets” [FN12] is
permitted, the government relies upon 853(f), which provides, in pertinent
part: FN12. Section 853(p) authorizes the forfeiture of
substitute assets [i]f any of the property described in subsection
(a) of this section, as a result of any act or omission of the
defendant— (1) cannot be located upon the exercise of due
diligence; (2) has been transferred or sold to, or deposited
with, a third party; (3) has been placed beyond the jurisdiction of the
court; (4) has been substantially diminished in value; or (5) has been commingled with other property which
cannot be divided without difficulty; the court shall order the forfeiture of any
property of the defendant up to the value of any property described in
paragraphs (1) through (5). 21 U.S.C. § 853(p). [I]f the court determines that there is probable
cause to believe that the property to be seized would, in the event of
conviction, be subject to forfeiture and that an order under subsection (e) of
this subsection may not be sufficient to assure the availability of the
property for forfeiture, the court shall issue a warrant authorizing the
seizure of such property. 21 U.S.C. § 853(f). The question of
pretrial restraint of “substitute assets” is a difficult one.
The majority view, embraced by the Third, Fifth, Eight and Ninth Circuits, is that
the pretrial restraint of substitute assets is impermissible. See United
States v. Field, 62
F.3d 246, 249 (8th Cir.1995); United States v. Ripinsky, 20 F.3d 359 (9th Cir.1994); United
States v. Floyd, 992
F.2d 498, 501-02 (5th Cir.1993). Accord In re Assets of Martin, 1 F.3d 1351, 1358-59 (3d Cir.1993)
(finding that substitute assets not subject to pretrial restraint under nearly
identical RICO forfeiture provision, 18 U.S.C. § 1963). Each
of these decisions has found dispositive the unambiguous statutory language,
which specifically limits pretrial restraint to property involved in or
traceable to the crime. See, e.g., Ripinsky, 20 F.3d at 363 (stating that while
§ 853 commands a liberal construction, “it does not
authorize us to amend by interpretation”) (quotations omitted). The minority
view, adopted by the Fourth Circuit and various district courts, recognizes the
legislative purpose of preserving assets for forfeiture through a liberal
construction of the forfeiture statutes. In re Assets of Billman, 915 F.2d 916 (4th Cir.1990), cert.
denied sub nom, McKinney v. United States, 500 U.S. 952, 111 S.Ct. 2258, 114 L.Ed.2d 711
(1991); United States v. Bellomo, 954 F.Supp. 630, 653-54 (S.D.N.Y.1997); United
States v. Schmitz, 153
F.R.D. 136, 138-40 (E.D.Wis.1994). Until recently,
the Second Circuit’s only pronouncement on the issue of restraint, United
States v. Regan, 858
F.2d 115 (2d Cir.1988), received varying interpretations among the district
courts. Compare United States v. Gigante, 948 F.Supp. 279, 281 (S.D.N.Y.1996) (stating that
Regan “says nothing about the power of a court to compel the forcible
pretrial restraint of substitute assets over the asset holder’s
objection”) with United States v. Bellomo, 954 F.Supp. 630 (S.D.N.Y.1997)
(stating that “it regarded the issue [of pretrial restraint of
substitute assets] as foreclosed by Regan”). In United States v. Gotti, 155 F.3d 144, 149 (2d Cir.1998),
however, the Second Circuit both clarified [*432]
its holding in Regan and articulated its position with respect to the issue of
pretrial restraint of substitute assets. The Second Circuit, joining the
majority view, held that the pretrial restraint of substitute assets is
impermissible. id.
at 119-22. It reasoned that “while the pretrial restraint of
substitute assets might arguably serve the stated legislative purpose of
preserving assets for forfeiture upon conviction, the unambiguous language of
[the RICO forfeiture statute,] 18 U.S.C. § 1963(d)(1)(A)
provides no authority for the restraints.” id. at 121-22.
FN13. The government, in fact, relies heavily upon
RICO forfeiture cases here, explicitly recognizing that the two statutes are
interchangeable. See Government’s Memorandum of Law, at 97 n. 34. FN14. Section 853(f) provides: The Government may request the issuance of a
warrant authorizing the seizure of property subject to forfeiture under this
section in the same manner as provided for a search warrant. If the court
determines that there is probable cause to believe that the property to be
seized would, in the event of conviction, be subject to forfeiture and that an
order under subsection (e) of this section may not be sufficient to assure the
availability of the property for forfeiture, the court shall issue a warrant
authorizing the seizure of such property. 21 U.S.C. § 853(f). Accordingly,
the Court concludes that substitute assets may not be seized before conviction
pursuant to 21 U.S.C. § 853(f). The government shall promptly
return to each defendant any substitute assets it has seized pursuant to the
invalid seizure warrants. [FN15] FN15. The Court’s decision does not affect
the government’s filing of lis pendens on the real properties
identified in the indictment as substitute assets. The filing of a lis pendens
does not constitute a “restraint” or
“seizure” within the meaning of 21 U.S.C.
§§ 853(e) or (f), respectively. United States v.
St. Pierre, 950 F.Supp.
334, 337- 38 (M.D.Fla.1996); United States v. Field, 867 F.Supp. 869, 873 n. 4
(D.Minn.1994), aff’d, 62 F.3d 246 (8th Cir.1995). b.
Defendants Fabian and Gail Hart Defendants
Fabian and Gail Hart (“Harts”) also take issue with certain
of the real property identified in the indictment as owned by them and subject
to forfeiture, but for a different reason. Their argument is that the real
property is not subject to forfeiture because it is not owned by them, but by
the St. Regis Mohawk Indian Tribe as “Indian country.” Section 853(n)
sets forth the procedures for determining claims of ownership by third-parties
in forfeited property. That statute requires that the interested third-party
assert [*433] its claim directly
and limits the time frame for contesting forfeiture until the time
“[f]ollowing the entry of an order of forfeiture.” 21 U.S.C.
§ 853(n)(1). Here, the Harts
lack standing to assert the ownership interests of the St. Regis Mohawk Indian
Tribe in the real property identified in the indictment. See 21 U.S.C.
§ 853(n). Moreover, the St. Regis Mohawk Indian Tribe may not
litigate the issue of their ownership interests in the subject property prior
to entry of an order of forfeiture. Compare United States v. Scardino 956 F.Supp. 774, 780 n. 5
(N.D.Ill.1997). Accordingly, the Harts’ claim is denied. III.
CONCLUSION For the reasons
stated above, the Court GRANTS defendants’ motions seeking variously:
to strike paragraph two of the preamble of the indictment; to dismiss
Countismiss Counts one, four and six of the indictment insofar as each alleges
a conspiracy to violate 18 U.S.C. § 546; and the return of
“substitute assets” seized by the government.
Defendants’ motions to dismiss on multiplicity grounds are DENIED
WITHOUT PREJUDICE to renew the motions after the close of the
government’s case or after the close of the entire case. Defendants
Larry and Dana Thompson’s motion to dismiss Counts one, two and four
on duplicity grounds is DENIED. Defendants’ motions seeking dismissal
of Counts two, three and five are DENIED in all respects. The Harts’
claim for the release of property on the ground that it is owned by the St.
Regis Mohawk Indian Tribe is DENIED. Any pending motion not addressed either
herein or by the Court’s bench decision of July 20, 1998 is DENIED. IT IS SO
ORDERED. |