Source: https://casetext.com/case/united-states-v-fisher-109
Timestamp: 2019-04-26 08:37:37+00:00

Document:
UNITED STATES OF AMERICA v. GEORGINA FISHER a/k/a Georgina Baratta, Defendant.
On May 14, 2015, defendant Georgina Fisher ("Fisher") filed a motion "for an Order: (1) granting a hearing pursuant to United States v. Monsanto, 924 F.2d 1186 (2d Cir. 1991); (2) directing the United States to remove any lis pendens or other restraints on Defendant's property; (3) striking certain forfeiture allegations in the subject Indictment; and/or (4) granting any additional relief the Court in its discretion deems appropriate." (Dkt. No. 21.) Central to the entire motion is Fisher's contention that "the government restrains Ms. Fisher's home and bank accounts with no allegation explaining why such assets are forfeitable. Ms. Fisher has established in the paragraphs above, in her Declaration, and in the Declarations of Attorneys Andreozzi and Bell, that she has insufficient assets with which to fund her defense without access to the equity in her home." (Dkt. No. 21-1 at 6.) Additionally, "[i]n the event that the government fails to present at the Monsanto hearing adequate evidence establishing probable cause that the assets are subject to forfeiture, Defendant respectfully requests that the Court direct removal of the lis pendens on Ms. Fisher's home, and strike from the indictment the forfeiture allegation with respect to that property." (Id. at 6-7.) Notably missing from Fisher's motion and the papers that ensued was any challenge to the grand jury's determination of probable cause that Fisher violated 31 U.S.C. §§ 5324(a)(1) and 5324(d)(1).
After hearing from the parties and considering their papers, this Court granted Fisher's request for a Monsanto hearing. (Dkt. No. 37.) The Government appealed the decision to have a hearing. (Dkt. No. 41.) Judge Arcara affirmed this Court's order. (Dkt. No. 51.) The Monsanto hearing was scheduled for August 20, 2015, even after the Court denied a Government motion for reconsideration. (Dkt. Nos. 56, 57.) In denying reconsideration, the Court distinguished two cases that the Government has cited persistently in its opposition to a hearing: Kaley v. United States, 134 S. Ct. 1090 (2014), and United States v. Cosme, 796 F.3d 226 (2d Cir. 2015). Unlike this case, the defendants in Kaley decided not to challenge the factual nexus between the assets in question and the alleged criminal conduct; they sought a direct challenge to the grand jury's finding of probable cause for the main substantive offense. See Kaley, 134 S. Ct. at 1096 ("The District Court then concluded that it should hold a hearing, but only as to whether the restrained assets are traceable to or involved in the alleged criminal conduct. The Kaleys informed the court that they no longer disputed that issue; they wished to show only that the case against them is baseless.") (internal quotation marks and citations omitted). Also unlike this case, Cosme was a "Second Circuit case in which 1) the defendant waived a Monsanto hearing, which is Fisher's only request here; 2) the defendant raised a completely different Fourth Amendment challenge that Fisher has not raised; and 3) the defendant won, and the case went back to the District Court for a hearing on that Fourth Amendment challenge." (Dkt. No. 56 at 4.) See also Cosme, 796 F.3d at 234-35 ("Here, however, as the government concedes in its brief on appeal, the grand jury did not vote on the forfeiture allegations, which were simply notice provisions not subject to a grand jury vote. Accordingly, Kaley does not apply, and the district court was required to make its own probable cause finding where none had yet been made in the case. The government argues that this error is harmless, but we disagree. Although the substantive allegations in the indictment mention the assets in connection with the criminal conduct, at no point in this case has the government had to demonstrate that it had probable cause to restrain Cosme's assets as required by the Fourth Amendment.") (emphasis added) (citation omitted).
MAGISTRATE JUDGE SCOTT: Let me cut through this because I have a concern, I'm not sure what to do with this. You have to help here. Is it your position that the grand jury was actually presented the question whether there was probable cause, there was a nexus between the activity and the assets?
MAGISTRATE JUDGE SCOTT: When we talk about presented to the grand jury, what about instructions? Was the grand jury given instructions?
MS. KRESSE: We always instruct the jury on the law.
MAGISTRATE JUDGE SCOTT: On nexus? On nexus?
MAGISTRATE JUDGE SCOTT: Well, for them to make the finding—yeah, go ahead.
MS. KRESSE: I would have instructed the jury on the law. I would have instructed the jury on the law regarding forfeiture.
The nexus between Theresa Lane and the structuring charge has been explained. The grand jury has made a probable cause determination in that regard. Allowing a Monsanto hearing under these circumstances would allow the defendant an unwarranted opportunity to second-guess the grand jury and to delve into the government's proof on this issue in a manner that is not available to defendants who cannot afford to hire their own counsel.
The application here is simple. A house cannot facilitate the crime of causing a financial institution to fail to keep a record. If the government charged money laundering or conspiracy to launder money, then an asset could be forfeitable if it facilitated the concealment of criminal proceeds. The government never states here how the house helped cause a Western Union agent to fail to keep records of [a] purchased money order.
• In U.S. v. Gregory Fisher, Case No. 08-CR-315, Fisher's ex-husband Gregory pled guilty to mail fraud and filing false tax returns. Gregory received a sentence that included a term of imprisonment and restitution in the amount of $969,647.09. The Government had alleged over $2 million of fraud proceeds but was never able to trace about $500,000 of the alleged fraud proceeds to any specific asset.
• The Court does not intend the above bullet points to be an exhaustive survey of every appearance of the word "forfeiture" in the grand jury transcript. The bullet points do, however, capture all the substance of the grand jury proceedings that pertained to the issues that have arisen with Fisher's pending motion.
To avoid disclosing dates of grand jury sessions or witnesses involved, the Court is referring to "parts" of the transcript based on the tabs that the Government used to subdivide it.
The year 2000 appears here in the transcript, but 2009 likely was said or at least intended.
The Court has some difficulty deciding what to address right now, or what issues are currently before it. This Court and Judge Arcara together have ruled three times so far that a Monsanto hearing should occur. (Dkt. Nos. 37, 51, 56.) The Monsanto hearing should have occurred on August 20, 2015. Whether a defendant should receive requested relief does not become a best-of-seven series just because the Government loses. Since another writing has become necessary, however, the Court will take the time to address some issues that drew its attention after the last round of arguments and the last round of briefing.
The first issue that the Court will address concerns disclosing enough information from the grand jury proceedings to clarify serious factual ambiguities that the Government has created through its own arguments. The Government has argued adamantly that it does not have to explain the source of the funds that it wants to seize. (See Dkt. No. 59 at 15, 18.) At the same time, and equally adamantly, the Government has argued that the grand jury cast a vote specifically to find a factual nexus between the substantive offense alleged and the assets that would be seized. (Compare id. at 12 ("[B]ut we never know what the grand jury votes on, right? I mean, we instruct them on the law . . . . No, it's a notice—because the forfeiture is a notice provision.") with id. at 12-13 ("But that being said, Judge, if evidence is presented showing the nexus, if the grand jury doesn't feel that there's a nexus between the property and the crime charged, they can come back and say . . . . [T]here's no forfeiture. We're not—we're not—because when they sign that indictment, Judge, it reads—again, it's a notice provision, but the indictment reads, and it's read verbatim to the grand jury, the grand jury alleges that, and then it says for the forfeiture. So if the grand jury doesn't feel that there is a nexus for that forfeiture, it's not going to sign this document. Again, I can't say what they—how they deliberated or anything else.").) But if the grand jury were making a formal finding and accusation of a factual nexus then wouldn't Fisher have the right to be put on notice of that finding? And in any event, why would a grand jury make a specific finding of a factual nexus when forfeiture is part of a sentence, and a forfeiture provision in an indictment is simply a notice of what might happen at sentencing upon conviction? See Cosme, 796 F.3d at 234-35 ("Here, however, as the government concedes in its brief on appeal, the grand jury did not vote on the forfeiture allegations, which were simply notice provisions not subject to a grand jury vote. Accordingly, Kaley does not apply, and the district court was required to make its own probable cause finding where none had yet been made in the case. The government argues that this error is harmless, but we disagree. Although the substantive allegations in the indictment mention the assets in connection with the criminal conduct, at no point in this case has the government had to demonstrate that it had probable cause to restrain Cosme's assets as required by the Fourth Amendment.") (emphasis added) (citation omitted). The lack of factual findings leading up to a forfeiture notice is exactly why "the forfeiture allegation need not specify precisely what interest the defendant has in the property . . . . [T]he extent of the defendant's interest in the property vis a vis that of third parties will be determined not in the criminal trial itself, but in the ancillary proceeding. Thus, it is not necessary for the grand jury to concern itself with the extent of the defendant's interest in the property, or as one district court has now held, with whether the defendant had any interest in the property at all. The inclusion of a forfeiture allegation in the indictment simply puts the defendant on notice that whatever interest he may have in the property will be forfeited if he is convicted of the underlying offense." Stefan D. Cassella, Criminal Forfeiture Procedure: An Analysis of Developments in the Law Regarding the Inclusion of a Forfeiture Judgment in the Sentence Imposed in a Criminal Case, 32 Am. J. Crim. L. 55, 61 (2004).
The explanatory value of the grand jury materials prompts a review of the rules governing grand jury disclosure. "The court may authorize disclosure—at a time, in a manner, and subject to any other conditions that it directs—of a grand-jury matter . . . preliminarily to or in connection with a judicial proceeding." FRCP 6(e)(3)(E)(i). The Court also has an inherent authority to disclose grand jury materials when appropriate because the tradition of grand jury secrecy is not absolute. See In re Craig, 131 F.3d 99, 103 (2d Cir. 1997); see also In re Biaggi, 478 F.2d 489, 493 (2d Cir. 1973). Although Fisher herself has not sought release of grand jury materials at this time, prudence warrants that the Court determine, as with a defense request, that any material disclosed "is needed to avoid a possible injustice in another judicial proceeding, that the need for disclosure is greater than the need for continued secrecy, and that [disclosure] is structured to cover only material so needed." Douglas Oil Co. of California v. Petrol Stops Nw., 441 U.S. 211, 222 (1979).
The grand jury materials that the Court reviewed in camera go a long way toward explaining what actually happened before the grand jury regarding forfeiture. As seen from the bullet points that appear above, the Government proffered its theory of why the assets in question ultimately would be subject to forfeiture. The Government used conditional language when describing forfeiture, language such as "we have to be able to trace the money" and "if we could trace the purchase of Theresa Lane." (Tr. Pt. IX at 6.) Conditional language indicates that the necessary tracing did not happen during the grand jury proceedings. The Government did not separate the substantive offense from the forfeiture notice. The Government did not give instructions specifically about factual nexus. That is to say, at no time during the grand jury proceedings did the Government tell the grand jurors that a general vote on the entire indictment would be construed as both probable cause for the underlying offense and probable cause for a factual nexus. The Government did not tell the grand jurors to vote sequentially, i.e., to vote first on the underlying substantive offense and then to proceed to factual nexus if they found probable cause for the offense. Inversely, the Government also did not tell the grand jurors that if they disagreed about factual nexus then they could express themselves that way, either by a specific finding to that effect or by voting down the draft indictments. Instead, the Government placed before the grand jurors an indictment and superseding indictment that contained a general forfeiture notice. The Government conceded at the last oral argument that it does not know what the grand jurors subsequently did. The vote sheets do not provide any clarity. The vote sheets say only that a threshold number of grand jurors "concurred in the Indictment in this case" or "concurred in the Superseding Indictment in this case" without separating the substantive offense from the forfeiture notice. That the grand jurors saw a superseding indictment with a forfeiture notice but voted only on the substantive offense makes sense, given that, "grand juries do not, in fact, make reliable findings regarding the source of allegedly forfeitable assets. The decisions of other courts reflect this same lack of confidence that grand juries give serious consideration to the forfeitability of assets . . . . Neither the DOJ nor any federal appellate decision (other than Bissell) maintains that an indictment with a forfeiture claim represents anything more than the government's allegation that certain assets are forfeitable. If it is true that an indictment does not constitute a probable cause determination as to forfeitability of assets, then the Fourth Amendment stands in the way of any pretrial restraint on property." Ricardo J. Bascuas, Of Defense Lawyers and Pornographers: Pretrial Asset Seizures and the Fourth Amendment, 62 U. Miami L. Rev. 1159, 1174 (2008).
Clarifying what the grand jury actually did in this case justifies disclosing to defense counsel the information contained in the bullet points above. Neither Fisher nor this Court have ever disagreed with the Government that Fisher cannot use a Monsanto hearing to revisit the grand jury's finding of probable cause for the underlying substantive offense of structuring. Theoretically, if the grand jury had held an additional specific vote on factual nexus then the Court likely would have to deny the request for a Monsanto hearing altogether. That specific vote on factual nexus never happened, though, and to deny Fisher a hearing and her choice of counsel based on a vote that never happened would constitute the kind of injustice that the Court is allowed to correct through limited disclosure. In making disclosures, the Court has taken care not to disclose more than necessary to resolve the ambiguities that the Government has introduced in this case.
One more problem remains. The grand jurors cast only one general vote for the underlying substantive offense. The Government never instructed the grand jurors to vote specifically on factual nexus, and the materials that the Court has reviewed give no indication of such a consideration apart from the main vote on the substantive offense. Why, then, has the Government doubled down on its insistence otherwise? (See Dkt. No. 60 at 3, 7, 8.) The charitable answer is that the Government sincerely believes that if it places a draft indictment with a forfeiture notice in front of a grand jury, and that grand jury casts a general vote for "probable cause," then the same vote covers both the substantive offense and a finding of factual nexus. Nothing in Kaley or Cosme, the cases that the Government has cited repeatedly, supports such a specific legal theory. The need to address the implications of that legal theory will be discussed further below. The possibility of an alternative answer prompted the Court to disclose limited grand jury information about the source of the funds in question. So far, and particularly because Fisher has not filed standard pretrial motions yet, the Court has not paid much attention to the substantive offense alleged. Without prejudice to any future arguments from Fisher, the Court views the alleged substantive offense as its own issue. Either Fisher structured or did not, and if a jury at trial believes beyond a reasonable doubt that she did then she will face appropriate consequences. The forfeiture notice is a whole other matter, and the grand jury materials finally make clear why the Government has been so passionate about the grand jury vote and about refusing to explain the origin of the funds that it wants to seize. Simply put, the Government has no idea where the funds in question came from, but it has a hunch that the funds ultimately trace back to unaccounted fraud proceeds from Fisher's ex-husband Gregory. In that context, the Government seeks forfeiture because it has unfinished business with Gregory. The Court has decided that defense counsel needs to know that to prepare a fair defense, and the use of one criminal case to address unaccounted funds from another has potential implications that will be addressed below.
The second issue that the Court will address in this Decision and Order concerns the implications of some of the arguments that the Government has made to avoid a Monsanto hearing. The Government has argued that a grand jury vote of probable cause for a substantive offense doubles as a vote of probable cause for a factual nexus that would set up forfeiture. That argument, if correct, would eliminate Monsanto hearings categorically, so long as the Government put a draft forfeiture notice in front of the grand jurors. The Government always would be able to argue that a single grand jury vote must have encompassed all aspects of the draft indictment. The issue of a factual nexus thus always would fall within the presumption of grand jury regularity. The Government has argued that defendants with retained counsel should not receive Monsanto hearings, as a matter of equality, because pro se defendants and defendants with assigned counsel are never in a position to request them. That argument, if correct, also would eliminate Monsanto hearings categorically because it would lump together defendants in categorically different situations. For defendants who have no attorneys and defendants with assigned attorneys, any talk of infringement on the right to choose counsel has no meaning. Both society and constitutional principles focus only on making sure that pro se defendants are capable of representing themselves and that poor defendants have constitutionally adequate representation. See U.S. v. Kopp, No. 00-CR-189A, 2007 WL 1747165, at *2 (W.D.N.Y. June 18, 2007) (Arcara, C.J.) ("[D]efendants who do not have the means to hire their own lawyers have no cognizable complaint so long as they are adequately represented by attorneys appointed by the courts.") (citations omitted). Defendants with enough financial means, in contrast, find themselves seeking Monsanto hearings because society expects them to use their own resources for representation and not to draw on limited public resources. Cf. U.S. v. Stevenson, No. CRIM. 10-120, 2012 WL 1038832, at *4 (W.D. Pa. Mar. 28, 2012) ("In conclusion, to conserve the limited resources of the public defender for those truly unable to afford qualified counsel, federal judicial officers must carefully review the financial data of each defendant to determine those defendants who can afford to pay for counsel."). Ironically, if defendants with financial means were denied counsel of their choice through forfeiture, and their financial status continued to disqualify them for assigned counsel, then their level of representation would fall below that of defendants receiving assigned counsel. These defendants then would be left representing themselves or trawling for attorneys who would take their cases pro bono. As for other issues, the grand jury materials here reveal that the Government's primary motive for forfeiture is to recover fraud proceeds from another case that it cannot otherwise prove as belonging to that other case. What is the limiting principle behind the strategic use of forfeiture notices across cases? The Government also has argued that structuring by itself can make otherwise legitimate funds subject to forfeiture. Again, does this argument have any limiting principles? Finally, in the event that a Monsanto hearing eventually occurs in this case, the Government has asserted that it could proceed by proffer. But what if proceeding by proffer prevents defendants from probing the extent of a factual nexus?
The Government is at least partially aware of how broad its arguments have been, because it has stated explicitly that "it's not just about this case. It's a bigger picture." (Dkt. No. 59 at 19.) The Government effectively has admitted that defense counsel around the country could be affected by the rulings that the Court makes here. If the Government insists on national implications then the Court will insist on national input. The Court hereby invites amici curiae to appear in this case and to provide briefing on the arguments that the Government has raised. Cf. In re Indu Craft Inc., 580 F. App'x 33, 34 (2d Cir. 2014) (granting amicus curiae status sua sponte); Empire Rayon Yarn Co. v. Am. Viscose Corp., 364 F.2d 491, 492 (2d Cir. 1965) (requesting amicus curiae briefing sua sponte "[b]ecause of the importance of the issue involved"); U.S. v. Heleniak, No. 14-CR-42A, 2015 WL 4208622, at *4 (W.D.N.Y. July 10, 2015) (Scott, M.J.) ("Granting leave [to appear as amicus curiae] should occur where the movant has an interest in the issues that extend beyond the particular case.") (citations omitted). In extending this invitation, the Court intends no slight to defense counsel, who has provided zealous and professional representation at all times. The Court simply wants a broader range of input before giving serious consideration to arguments with potentially enormous implications.
1) The grand jurors here received a draft indictment and superseding indictment that contained a proposed forfeiture notice. They cast a vote that they "concurred in the Indictment in this case" or "concurred in the Superseding Indictment in this case"
without separating the substantive offense from the forfeiture notice. Under the facts presented here, can that vote mean anything other than a grand jury vote on the substantive offense? Alternatively, can a grand jury finding of probable cause on a substantive offense double as a finding of a factual nexus, so as to defeat a request for a Monsanto hearing?
2) The Government has argued that granting Monsanto hearings to defendants who can afford counsel is unfair to pro se defendants and to defendants with assigned counsel. Is this true?
3) Can the Government use a forfeiture notice in a second criminal action to recover assets not traced after a prior criminal action?
4) Can a structuring offense by itself make otherwise legitimate funds subject to forfeiture?
5) Do courts have discretion to require that Monsanto hearings proceed in adversarial fashion and not by proffer?
The only question remaining is whom to invite to intervene, and the Court seems to have a fairly simple answer available. In Kaley, the Supreme Court allowed amicus briefing from the following national organizations: the American Bar Association, the Cato Institute, the Institute for Justice, and the National Association of Criminal Defense Lawyers. These organizations are granted leave to intervene here and are respectfully invited to submit amicus briefing on any or all of the above five questions, as they may see fit. On the date attached to this Decision and Order, the Court will serve each organization with a hard copy of this document by first-class mail at the addresses listed below; the Court also will send a Notice of Electronic Filing to the email addresses listed below. Any organization that wishes to accept the Court's invitation is respectfully requested to file a notice of appearance within 30 days to confirm its intentions.
For all of the foregoing reasons, the Court issues invitations to appear as amici curiae as explained above. Speedy-trial time remains excluded because Fisher's motion to lift the restraints on her assets (Dkt. No. 21) remains pending.

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