Source: https://www.scribd.com/document/30343217/Madoff-Forfeiture-motion-in-Frank-Dipascali-case
Timestamp: 2016-10-22 13:45:43
Document Index: 145261964

Matched Legal Cases: ['§ 1956', '§ 981', '§ 2461', '§ 853', '§ 982', '§ 853', '§ 981', '§ 2461', '§ 982', '§ 981', '§ 981', '§ 981', '§ 981', '§ 16', '§ 2461', '§ 1961', '§ 1341', '§ 982', '§ 2416', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 2461', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 853', '§ 1963', '§ 853', '§ 853', '§ 853', '§ 982', '§ 853', '§ 3663', '§ 853', 'art 9']

BrowseBrowseInterestsBiography & MemoirBusiness & LeadershipFiction & LiteraturePolitics & EconomyHealth & WellnessSociety & CultureHappiness & Self-HelpMystery, Thriller & CrimeHistoryYoung AdultBrowse byBooksAudiobooksComicsSheet MusicBrowse allUploadSign inJoinBooksAudiobooksComicsSheet MusicUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------- x UNITED STATES OF AMERICA : - v. : FRANK DIPASCALI, JR., : Defendant.------------------------------- x
09 Cr. 764 (RJS)
THE UNITED STATES OF AMERICA’S APPLICATION FOR A PRELIMINARY ORDER OF FORFEITURE (FINAL AS TO THE DEFENDANT) AND FOR APPROVAL OF STIPULATION AND ORDERS AS TO DEFENDANT’S WIFE, CHILDREN, AND SISTER The United States of America (the “Government”) respectfully moves the Court for the entry of three orders, which collectively will resolve the Government’s forfeiture claims against the defendant, FRANK DIPASCALI, JR., as well as any claims that the DiPascali family might make to the forfeited assets, and return assets transferred by DIPASCALI to third parties to the Government: 1. A Preliminary Order of Forfeiture (Final as to the Defendant) as to DIPASCALI, which is attached hereto as Appendix 1; 2. A Stipulation and Order between the United States Attorney’s Office for the Southern District of New York (the “Office”) and the defendant’s wife, Joanne T. DiPascali, which is attached hereto as Appendix 2; and 3. A Stipulation and Order between this Office and the defendant’s sister, also named Joanne DiPascali, which is attached hereto as Appendix 3.
The Government intends to request that the assets forfeited by the defendant and his family pursuant to these agreements be distributed to the victims of his crimes, in accordance with the process of remission set out in Department of Justice regulations. By approving the agreements, the Court will allow the parties to forego expensive and time-consuming litigation and further the Government’s goal of distributing to victims, as soon as practicable, the net proceeds from the sale or other disposition of the forfeited assets. PROCEDURAL BACKGROUND 1. Information 09 Cr. 764 (RJS) (the “Information”), filed August 11, 2009, charged
FRANK DIPASCALI, JR. (“DIPASCALI” or the “defendant”), in ten counts, in connection with a scheme to defraud clients of Bernard L. Madoff Investment Securities (“BLMIS”), from at least as early as in or about the 1980s through on or about December 11, 2008, by soliciting billions of dollars of funds under false pretenses, failing to invest investors’ funds as promised, and misappropriating and converting investors’ funds to Madoff’s and DIPASCALI’s own benefit and the benefit of others without the knowledge or authorization of the investors. 2. The Information also contains two forfeiture allegations, the first of which
concerns the offenses charged in Counts One, Two, Six, and Seven of the Information, which constitute “specified unlawful activity” as that term is defined in 18 U.S.C. § 1956(c)(7) (the “SUA Offenses”), and which seeks criminal forfeiture, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461, of all property constituting or derived from proceeds traceable to the commission of the SUA Offenses, including a money judgment in the amount of $170 billion, representing the amount of proceeds traceable to the commission of the SUA Offenses, all property constituting or derived from proceeds traceable to the commission of the SUA Offenses, 2
and all property traceable to such property, pursuant to 21 U.S.C. § 853(p) (the “SUA Proceeds Forfeiture Allegation”). 3. The second forfeiture allegation, concerning the money laundering offense
charged in Count Eight of the Information (the “Money Laundering Offense”), seeks criminal forfeiture, pursuant to 18 U.S.C. § 982(a)(1), of all property involved in the Money Laundering Offense, including a money judgment in the amount of $250 million, representing the property involved in the Money Laundering Offense, all property traceable to such property, and substitute assets, pursuant to 21 U.S.C. § 853(p) (the “Money Laundering Forfeiture Allegation”). 4. On August 11, 2009, pursuant to the terms of a cooperation agreement with this
Office, DIPASCALI pleaded guilty to all ten counts in the Information, admitted the forfeiture allegations, and agreed to forfeit to the United States: (i) pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461, a sum of money equal to $170 billion, representing the amount of proceeds traceable to the commission of the SUA Offenses charged in Counts One, Two, Six, and Seven of the Information, and property traceable to such property; and (ii) pursuant to 18 U.S.C. § 982, a sum of money equal to $250 million, representing the property involved in the Money Laundering Offense charged in Count Eight of the Information, and all property traceable to such property, for a total money judgment in the amount of $170.25 billion. The Related Civil Forfeiture Action 5. On August 24, 2009, within two weeks of the defendant’s guilty plea, the
Government filed a separate civil action seeking forfeiture of the defendant’s luxury sportfishing yacht and three cars, United States v. One 2003 Viking 61' Convertible Motor Yacht Known as Dorothy Jo, et al., No. 09 Civ. 7434 (RMB). The United States Marshals Service (“USMS”) 3
took custody of the Dorothy Jo in April 2009 pursuant to a seizure warrant issued by Magistrate Judge Katz. The DiPascali family voluntarily turned over the three cars to the USMS in or about August 2009. 6. The defendant and his wife promptly resolved the civil action by agreeing to
forfeit their interests in the assets and agreeing to their sale for the benefit of victims. The parties stipulated that the net sale proceeds would be applied to any forfeiture money judgment to be imposed upon DIPASCALI as part of his sentence in the above-captioned case. 7. The USMS subsequently sold the Dorothy Jo and the three cars — a 2009 Audi
S5 Quatro Coupe, a 2007 Mercedes Benz E350 4M AWD 4DR, and a 2006 Mercedes Benz ML500 — along with some of Madoff’s assets at well-publicized auctions held in October and November 2009. The sale of the yacht and three cars netted approximately $960,500 for victims.1 The Interlocutory Orders of Sale 8. On or about January 29, 2010, the Court endorsed a Stipulation and Order of
Interlocutory Sale (Bridgewater Property), in which the defendant and his wife, Joanne T. DiPascali, agreed to the surrender and sale, pending entry of Preliminary and Final Orders of Forfeiture in the above-captioned case, of their residence located at 1400 Mountain Top Road, Bridgewater, New Jersey, 08807, and all the valuable, insured, or readily salable personal property located at such property, including furniture, paintings, televisions, appliances, games
During the same time period, the USMS sold over 100 items of Madoff jewelry, furs, and household items at a live auction at the Sheraton New York. With many items fetching three or more times their appraised value, over $720,000 was raised for the benefit of the fraud victims. 4
and recreational equipment, home gym and exercise equipment, patio furniture, and law, garden, and pool equipment (collectively, the “Bridgewater Property”). 9. Immediately thereafter, on or about February 1, 2010, the Bridgewater Property
was surrendered to the USMS. The property, which remains in USMS custody, is being marketed for sale. 10. On or about February 2, 2010, the Court endorsed a Stipulation and Order of
Interlocutory Sale (Conveyances, Monmouth County, NJ), in which the defendant and his wife agreed to the surrender and sale, pending entry of Preliminary and Final Orders of Forfeiture, of a 2005 17' Boston Whaler Montauk center console runabout, a jetski, and a trailer for the boat. 11. On or about February 3, 2010, the USMS seized the Boston Whaler, the jetski,
and a trailer for each of them. The property is in the custody and control of the USMS pending an interlocutory sale.2 12. On or about April 7, 2010, the Court endorsed a Stipulation and Order of
Interlocutory Sale (Additional Vehicles), in which the defendant and his wife agreed to the surrender and sale, pending entry of Preliminary and Final Orders of Forfeiture, of a 2007 Dodge Ram 1500 pickup truck, a 2004 Nissan Pathfinder LE Platinum Edition, a 2006 Load Rite Trailer (for the jetski), two 2005 Yamaha Raptor ATVs, a 2001 Yamaha off-road motorcycle, a 2008 Honda motocross off-road motorcycle, two mini bikes, a motorized scooter, and a snow blower.
The USMS is planning to sell the Boston Whaler on Friday, April 23, 2010, at 10:00 AM at a public auction in East Brunswick, New Jersey. See www.cwsmarketing.com/usmscars.cfm (lot 44). 5
Joanne DiPascali had previously surrendered to the USMS, in or about February
and March 2010, the 2004 Nissan Pathfinder, the 2007 Dodge Ram, and the 2008 Honda off-road motorcycle, as well as watches and jewelry. 14. The defendant has pleaded guilty to counts as to which the Government is seeking
the penalty of criminal forfeiture and has admitted the forfeiture allegations. He has agreed to the entry of money judgments in the amounts alleged in the Information and to relinquish all of his interest in any forfeitable specific property. He has already surrendered and entered into agreements with this Office that permit the sale of much of that property. Entry of a preliminary order of forfeiture is therefore appropriate pursuant to Rule 32.2(b) of the Federal Rules of Criminal Procedure. STATUTORY BACKGROUND 15. The SUA Proceeds Forfeiture Allegation is made pursuant to 18 U.S.C. § 981,
which provides that “[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to a violation of . . . any offense constituting ‘specified unlawful activity’ (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense” is “subject to forfeiture to the United States.” 18 U.S.C. § 981(a)(1)(C).3 Section 1956(c)(7) then incorporates
By its own terms, 18 U.S.C. § 981 is a civil forfeiture provision. But: [w]hile § 981 authorizes only civil forfeitures, the forfeitable property it describes is made subject to criminal forfeiture by the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), Pub. L. No. 106-185, § 16, codified at 28 U.S.C. § 2461(c) (providing for the criminal forfeiture of any property for which forfeiture “is authorized in connection with a violation of an Act of Congress . . . but no specific statutory provision is made for criminal forfeiture upon conviction” (emphasis added)).
United States v. Capoccia, 503 F.3d 103, 115-16 (2d Cir. 2007). See also United States v. Day, 6
“any act or activity constituting an offense listed in section 1961(1) of this title,” which contains a list of predicate acts under RICO, and which, in turn, explicitly includes mail, wire and securities fraud, see 18 U.S.C. § 1961(1) (defining “racketeering activity” to include any act indictable under 18 U.S.C. §§ 1341 (relating to mail fraud), 1343 (relating to wire fraud), and “any offense involving . . . fraud in the sale of securities”). 16. The Money Laundering Forfeiture Allegation, meanwhile, is made pursuant to 18
U.S.C.§ 982(a)(1), which provides that “[t]he court, in imposing sentence on a person convicted of an offense in violation of section 1956 [or] 1957 . . . of this title, shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property.” 17. In other words, any property, of any kind, that constitutes or is derived from
proceeds traceable to a violation of mail fraud, wire fraud, securities fraud, or conspiracy to commit mail, wire, or securities fraud “is subject to forfeiture to the United States,” as is any property, of any kind, involved in a money laundering offense. When the criminal defendant is convicted of the underlying offenses, “the court shall order the forfeiture of the property as part of the sentence in the criminal case.” 28 U.S.C. § 2416(c) (emphasis supplied). The forfeiture order may take the form of a personal money judgment imposed upon the defendant, see United States v. Awad, __ F.3d __, No. 07-4883-cr, 2010 WL 840243 (2d Cir. Mar. 11, 2010) (per curiam); United States v. Vampire Nation, 451 F.3d 189, 201-02 (3d Cir. 2006); forfeiture of specific property with the requisite nexus to the offense, see Fed. R. Crim. P. 32.2(b)(1)(A); or
524 F.3d 1361, 1376 (D.C. Cir. 2008); United States v. Vampire Nation, 451 F.3d 189, 199 (3d Cir. 2006). 7
forfeiture of substitute assets, see 21 U.S.C. § 853(p); Fed. R. Crim. P. 32.2(e)(1)(B). See generally Fed. R. Crim. P. 32.2(b)(2)(A). 18. The determination of whether property is subject to forfeiture is made by the
district court as part of the sentencing process, applying a preponderance-of-the-evidence standard. See United States v. Fruchter, 411 F.3d 377, 383 (2d Cir. 2005). Importantly, the forfeiture court may determine that property is forfeitable regardless of whether it is held by the criminal defendant or a third party. If the Government can establish that property derived from or used to commit a criminal offense belongs to the defendant but is held by a nominee, the Government can forfeit the property. See United States v. Totaro, 345 F.3d 989, 995-96 (8th Cir. 2003) (if claimant were a straw owner, she could not contest the forfeiture notwithstanding her legal title); United States v. Houlihan, 92 F.3d 1271, 1289-1300 (1st Cir. 1996) (house forfeited from defendant based on evidence establishing that defendant’s uncle, whose name appeared on the deed, was a mere straw man); United States v. Ida, 14 F. Supp. 2d 454, 460-61 (S.D.N.Y. 1998) (person who ostensibly used his own money to buy property and titled it in his own name was nevertheless a straw owner; evidence showed that property was purchased for use of the defendant), aff’d, 181 F.3d 83 (2d Cir. 1999) (unpublished). Indeed, the purpose of the relation back doctrine of 21 U.S.C. § 853(c) is to “prevent defendants from escaping the impact of forfeiture by transferring assets to third parties.” United States v. Reckmeyer, 836 F.2d 200, 203 (4th Cir. 1987).4 The relation back doctrine, as codified in 21 U.S.C. § 853(c), is a well-established principle of forfeiture law. See Caplin & Drysdale, 491 U.S. at 627 (citing United States v. Stowell, 133 U.S. 1 (1890); S. Rep. No. 98-225, p. 200 & n.27 (1983)); United States v. Monsanto, 491 U.S. 600, 613 (1989). Under the relation back doctrine, the Government’s interest in forfeitable property vests at the time of the offense giving rise to the forfeiture. See 21 U.S.C. § 853(c) (“All right, title, and interest in [forfeitable] property . . . vests in the United States upon 8
The Criminal Forfeiture Procedure 19. Criminal forfeiture proceedings are governed by 21 U.S.C. § 853 (other than
section 853(d)) and Federal Rule of Criminal Procedure 32.2. See 28 U.S.C. § 2461(c). Pursuant to Rule 32.2, once a criminal defendant is convicted of the offenses giving rising to the forfeiture allegations — either by trial or plea — the district court must enter a preliminary order of forfeiture. The preliminary order divests the criminal defendant of all rights he has — if any — in the property subject to forfeiture, and transfers those rights to the Government, “without regard to any third party’s interest in the property.” Fed. R. Crim. P. 32.2(b)(2). This is so because criminal forfeiture is a penalty imposed on the defendant, see Awad, 2010 WL 840243, at *2 (“the statutory text [of section 853] makes it ‘clear that Congress conceived of forfeiture as a punishment for the commission of various . . . crimes’” (quoting United States v. Casey, 444 F.3d 1071, 1073 (9th Cir. 2006))); as a result, the defendant can only be made to forfeit his own interest in property, see Pacheco v. Serendensky, 393 F.3d 348, 355 (2d Cir. 2004) (“Although partial forfeitures may occasionally make for strange bedfellows — such as making the government co-owners of real property with the spouse of a criminal defendant — the alternative could give the government an undeserved windfall and deny an innocent third party her valid property interest.”). See also United States v. Gilbert, 244 F.3d 888, 919 (11th Cir. 2001) (“Because it seeks to penalize the defendant for his illegal activities, in personam forfeiture reaches only that property, or portion thereof, owned by the defendant.”).
the commission of the act giving rise to forfeiture under this section.”); United States v. United States Currency, 895 F.2d 908, 916 (2d Cir. 1990) (because “the forfeiture occurs when the crime is committed,” a defendant has no interest in the forfeited property “as of that moment”). 9
Thus, although the preliminary order is final as to the defendant, it is merely
preliminary as to potential third parties. See Fed. R. Crim. P. 32.2(b)(2). Following entry of a preliminary order of forfeiture, the forfeiture laws then require notice to potential third-party claimants, an opportunity for their claims to be heard, and standards by which their claims must be adjudicated. These procedures, set forth in section 853(n), “provide the exclusive means by which a third party may lay claim to forfeited assets” after the preliminary forfeiture order has been entered. DSI Assocs. LLC v. United States, 496 F.3d 175, 183 (2d Cir. 2007); see also De Almeida v. United States, 459 F.3d 377, 381 (2d Cir. 2006). See generally Libretti v. United States, 516 U.S. 29, 44 (1995) (“Once the government has secured a stipulation as to forfeitability, third-party claimants can establish their entitlement to a return of the assets only by means of the hearing afforded under 21 U.S.C. § 853(n).”). 21. The requirements for providing notice of the forfeiture action and the
Government’s intent to forfeit the property are set out in Rule 32.2(b)(6) and recited in the preliminary order. The Government is required to serve notice of its intent to finally forfeit the property on any potentially interested third parties, either by publication or, where individuals who reasonably appear to be potential claimants are identifiable, by individual notice. See 21 U.S.C. § 853(n)(1); Fed. R. Crim. P. 32.2(b)(6)(A). If no petitions asserting an interest in the property are filed, following the expiration of the period for the filing of such petitions, the United States is entitled to clear title. See Rule G(5)(a)(ii)(B) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (each, a “Supplemental Rule”); see also DSI Assocs., 496 F.3d at 182 n.8 (quoting Advisory Committee Notes to Rule 32.2 to say
“[i]f a third party has notice of the forfeiture but fails to file a timely claim, his or her interests are extinguished, and may not be recognized when the court enters the final order of forfeiture”). 22. Under the criminal forfeiture statute, a third party may petition for a hearing to
adjudicate its alleged interest in property to be forfeited in a so-called “ancillary proceeding,” conducted after the court enters its preliminary order of forfeiture. See 21 U.S.C. § 853(n). Such petitions must be filed within a statutorily-prescribed time frame, see 21 U.S.C. § 853(n)(1) & (2); see also Supplemental Rule G(5)(a)(ii), and meet certain other requirements, see id. § 853(n)(3) (“The petition shall be signed by the petitioner under penalty of perjury and shall set forth the nature and extent of the petitioner’s right, title, or interest in the property, the time and circumstances of the petitioner’s acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner’s claim, and the relief sought.”). 23. As the Second Circuit made clear in Pacheco, a court resolving a third-party
petition does not necessarily need to conduct a hearing, but rather, such ancillary proceedings resemble civil actions, may involve discovery, and may be resolved by motion to dismiss or for summary judgment. See 393 F.3d at 351-52; see also Fed. R. Crim. P. 32.2(c)(1)(B). 24. The Government is also authorized to compromise third party petitions — for
example, by releasing property subject to forfeiture as part of a settlement. See 21 U.S.C. § 853(i)(2); see also In re W.R. Huff Asset Mgmt. Co., 409 F.3d 555 (2d Cir. 2005) (affirming Government’s compromise of forfeiture claims). Indeed, courts will approve the Government’s compromise of weak third party petitions, which “might ultimately prove defective, [because] they are not so frivolous that their resolution would not result in protracted, costly, internecine litigation that would, at a minimum, have the effect of delaying and diminishing the victims’ 11
recoveries.” United States v. Dreier, __ F. Supp. 2d __, No. 09 Cr. 85 (JSR), 2010 WL 424706, at *3 (S.D.N.Y. Feb. 5, 2010). 25. If the court does conduct a hearing, both the petitioner and the government are
entitled to present evidence, and the court may also consider relevant portions of the criminal trial transcript, if any. See 21 U.S.C. § 853(n)(5). The burden is ultimately on the petitioner to prove his claim by a preponderance of the evidence. See id. § 853(n)(6). 26. Importantly, there are only two ways that a third party can show a valid interest in
property subject to forfeiture under section 853(n): The petitioner “must either (a) have an interest in the property that is superior to the criminal defendant’s because it arose prior to ‘the time of the commission of the acts [that] gave rise to the forfeiture,’ 21 U.S.C. § 853(n)(6)(A), or (b) be a ‘bona fide purchaser for value’ of the property who was ‘reasonably without cause to believe that the property was subject to forfeiture’ at the time of purchase, id. § 853(n)(6)(B).” Pacheco, 393 F.3d at 353. 27. A third party comes under paragraph 6(A) if he had an interest in the property at
the time of the offense, and he comes under 6(B) if he acquired his interest after the offense. If the third party comes under 6(A), he only has to show an interest in the property superior to the defendant’s interest — for example, a secured creditor — whereas if he comes under 6(B), he has to be a bona fide purchaser for value. 28. In either case, the third party petitioner must have an interest in specific property;
general creditors and even victims lack standing to assert a claim in an ancillary proceeding or otherwise intervene in the criminal case. See DSI Assocs., 496 F.3d 175 (general creditor may not intervene, under section 853 or Federal Rule of Civil Procedure 24, in criminal forfeiture 12
proceeding); United States v. Ribadeneira, 105 F.3d 833, 835-36 (2d Cir. 1997) (per curiam) (general creditors have no standing in ancillary proceeding because they have no interest “in” specific forfeited property; section 853(n) requires petitioners to demonstrate “an interest in a particular, specific asset, as opposed to a general interest in an entire forfeited estate or account”); see also United States v. Speed Joyeros, S.A., 420 F. Supp. 2d 121, 125 (E.D.N.Y. 2006); accord United States v. Watkins, 320 F.3d 1279, 1283-84 (11th Cir. 2003); United States v. Campos, 859 F.2d 1233, 1239 (6th Cir. 1988). 29. If the petitioner cannot meet the requirement of either paragraph 6(A) or 6(B) of
section 853(n), he simply cannot demonstrate an interest in property subject to forfeiture. See United States v. BCCI Holdings (Luxembourg) S.A. (Final Order of Forfeiture and Disbursement), 69 F. Supp. 2d 36, 60 (D.D.C. 1999) (“The only grounds on which a third party can prevail in the ancillary proceeding are those set forth in §§ 1963(1)(6)(A) & (B). . . . If the claimant fails to establish facts supporting his claim under one or the other of these theories, he is not entitled to any relief in the ancillary proceeding.”); see also United States v. Hooper, 229 F.3d 818, 822-23 (9th Cir. 2000); United States v. Kennedy, 201 F.3d 1324, 1335 (11th Cir. 2000). 30. Following the forfeiture court’s disposition of all petitions filed in the ancillary
proceedings, or if no petitions are filed following the expiration of the requisite time periods, the court must enter a final order of forfeiture, thereby giving the United States clear title to the property. See 21 U.S.C. § 853(n)(7); Fed. R. Crim. P. 32.2(c)(2). The order may be amended at any time to include subsequently located property or property qualifying as substitute assets. See Fed. R. Crim. P. 32.2(e). Indeed, recent amendments to Rule 32.2 provide that while the 13
forfeiture court should ordinarily enter a preliminary order of forfeiture sufficiently in advance of sentencing so that a final order (as to the defendant) can be entered at the time of sentencing, see Fed. R. Crim. P. 32.2(b)(2)(B),5 it may in appropriate cases enter a forfeiture order at sentencing that lists any then-identified property and describes other property in general terms only, see Fed. R. Crim. P. 32.2(b)(2)(C). The court may then later amend that order when additional specific property is identified or when the amount of the money judgment has been calculated. See id. THE PROPOSED ORDERS 31. Taken together, the three agreements for which the Government now seeks the
Court’s approval will (a) set forth the amount of the personal money judgment for which the defendant is liable to the United States ($170.25 billion); (b) divest the defendant of all right, title, or interest in all of his property, wherever located, known or unknown, including certain specified property that the Government estimates to be valued in excess of $6.1 million; (c) extinguish any claim to those assets that the defendant’s wife or children might have made in excess of $285,000 (less approximately $100,000 in offsets); and (d) extinguish claims by the defendant, his wife, and his children to any assets transferred to third parties without consideration. Two such transfers, in the combined principal amount of $470,757, have already been recovered from the defendant’s sister, with interest. The Proposed Preliminary Order of Forfeiture (Final as to the Defendant) 32. The proposed Preliminary Order, to which the defendant has consented, extends to
the full reach of property in which the defendant has or may have an interest. In order words, the Although a criminal forfeiture order is imposed upon the defendant as part of his sentence, a final order of forfeiture may be entered “at any time before sentencing if the defendant consents.” Fed. R. Crim. P. 32.2(b)(4)(A). 14
proposed Preliminary Order is not a concession or compromise, but applies the forfeiture laws to the defendant to the fullest extent authorized by federal law. 33. First, the defendant has agreed to the imposition of money judgments totaling
$170.25 billion, representing the full amount of proceeds of the securities fraud, conspiracy, mail fraud, and wire fraud offenses to which he has pleaded guilty, plus the amount of money involved in the international money laundering offense charged in Count Eight. The defendant, by his own admission, was a participant in the conspiracy and was aware of the scope of the fraud. By virtue of his plea and admission to the money judgment amounts, therefore, the defendant has acknowledged that the full extent of the massive conspiracy was known or at least reasonably foreseeable to him, making him jointly and severally liable for the full amount of the massive fraud, regardless of whether he personally received such proceeds. See, e.g., Fruchter, 411 F.3d at 384 (conspirator is jointly and severally liable for all proceeds foreseeably derived from the criminal activity giving rise to the forfeiture); United States v. Edwards, 303 F.3d 606, 643-44 (5th Cir. 2002).6 34. The proposed Preliminary Order also divests the defendant of any and all of his
right, title and interest in the specific property listed in Exhibit A. The Government presently estimates that the specific property will yield at least $6.1 million in net proceeds after liquidation.
The money judgments may be satisfied out of directly forfeitable property, property traceable thereto, or substitute assets. See United States v. Saccoccia, 898 F. Supp. 53, 56 (D.R.I. 1995) (“The forfeiture order constitutes a money judgment against the defendants and may be satisfied either from the proceeds of their racketeering activity, property derived from those proceeds or, if such proceeds or property have been concealed, from any other property belonging to the defendants”). 15
DiPascali has also, as explained above, already surrendered to the USMS and
allowed to be sold considerable personal property, including the Dorothy Jo, DIPASCALI’s sportfisherman yacht, and three cars. In total, the sale of these assets has already netted $960,505.29 for victims. 36. The other assets to be forfeited include DIPASCALI’s residence in Bridgewater,
New Jersey; a condominium in Haverford, Pennsylvania, that DiPascali purchased and put in the name of one of his sons; cars, all-terrain vehicles and water craft; and all financial institution accounts, loans and transfers of funds (including the principal sum of approximately $470,757 that was transferred to his sister, discussed further below). Most of this property has already been turned over to the USMS for sale. 37. The Preliminary Order, moreover, is not limited to the specific property set forth
on Exhibit A, but extends to any other property in which the defendant has or may have an interest. That is, although the Government has undertaken an extensive and, we believe, comprehensive search for DIPASCALI’s assets, the Preliminary Order fully protects the Government (and thus victims) by forfeiting the defendant’s interest in absolutely any property. Regardless of whether the property is specified in the proposed Order, or whether the property even exists now, the defendant has relinquished any claim he may have to it and has consented to its forfeiture to the United States. 38. The proposed Preliminary Order complies with the requirements of Rule 32.2 and
21 U.S.C. § 853(n) in all respects, including insofar as it requires the Government to serve notice of its intent to finally forfeit the property subject to the Preliminary Order on any potentially interested third parties and provides a procedure for those third parties to file claims against the 16
assets. The Stipulation and Order Between the Office and the Defendant’s Wife 39. The Government has also entered into an agreement resolving all claims to the
forfeited property by DIPASCALI’S wife, who will under the terms of that agreement receive a net sum of $177,982. 40. Joanne T. DiPascali has been married to the defendant for twenty-five years. The
couple has four children: Dorothy (age 23), Frank (21), Gregory, (18), and Michael (15). The proposed Stipulation and Order resolves all claims that any of them have asserted or could assert to the property subject to the Preliminary Order. Absent the Court’s approval of the settlement, each of them could make third-party claims to the property, resulting in prolonged litigation. 41. In consideration of Joanne DiPascali and the DiPascali children7 relinquishing any
and all claims against the assets subject to the Preliminary Order of Forfeiture, and in compromise of any claims that she could have asserted, this Office has agreed not to contest her claim to $285,000, reduced by certain offsets to the net amount of $177,982. 42. As part of the proposed agreement and previously, the DiPascali family has
cooperated extensively in turning over most specific property to the USMS. Significantly, the family vacated their home and surrendered it to the USMS; turned over vehicles, water craft, watches, jewelry and other personal property; and agreed to surrender a condominium in Haverford, Pennsylvania, held in the name of DIPASCALI’s son Frank M. DiPascali (the
The three adult DiPascali children have executed or will execute the proposed Stipulation and Order; DIPASCALI and Joanne DiPascali have signed or will sign on behalf of their minor child, Michael. 17
“Pennsylvania Condo”) by May 31st.8 The defendant’s wife and children have also agreed to forego any claims they may have, not only with respect to the specific property, but also as to any other property in which they might have an interest, including property that has not yet been discovered. 43. Absent the Court’s approval of the proposed agreement, all of these assets would
potentially be the subject of litigation with the DiPascali family. 44. In particular, absent the Court’s approval of the Stipulation and Order, Joanne
DiPascali would file a petition pursuant to 21 U.S.C. § 853(n) asserting an interest in the property subject to forfeiture in the Preliminary Order, including, but not limited to, a one-half ownership interest in certain real property, including the Bridgewater Property and the Pennsylvania Condo. Absent a settlement, at a hearing on the forfeitability of a portion of the Bridgewater Property, Joanne DiPascali would attempt to show, for example, that in or about 1982 or 1983, she received from her mother (just prior to her mother’s death in February 1983) an undivided interest in Apartment 2E in the Lindenwood Village Cooperative, located at 89-40 151st Avenue, Howard Beach, New York 11414. She would further contend that that interest was sold on or about April 21, 1987 for $97,000, and that those proceeds were used to fund the purchase on or about April 22, 1987, of real property located at 1041 Rector Road, Bridgewater, New Jersey 08807 (the “Rector Road Property”). The purchase price for the Rector Road Property was $222,500, of which $142,600 was financed. 45. Joanne DiPascali would further contend that she and DIPASCALI owned the
Rector Road Property jointly, and subsequently sold it on or about December 12, 2001, for The Government is submitting a proposed order permitting the interlocutory sale of the Pennsylvania Condo simultaneously with this application. 18
$400,000, which was in turn invested in the real property and appurtenances located at 1400 Mountain Top Road, Bridgewater, New Jersey (i.e., the Bridgewater Property). The Bridgewater Property was purchased in or about June 2001 and is titled in the name of Joanne T. DiPascali. 46. The Bridgewater Property is among the specific property subject to forfeiture in
the proposed Preliminary Order. Although the property has been appraised in excess of $1.38 million and is not encumbered by a mortgage or any other security interest, the extent of Joanne DiPascali’s alleged interest in the property cannot be readily valued because, among other reasons, the Bridgewater Property was being renovated at the time that the Government took custody of it. 9 47. Joanne DiPascali would, therefore, claim that she is entitled to a portion of the
equity in the Bridgewater Property that is attributable to her ownership interest in at least half of the proceeds from the sale of the Rector Road Property, or $200,000. Moreover, because her alleged interest in the Bridgewater Property is allegedly traceable to her inheritance and not to the Madoff fraud, Joanne DiPascali would further assert that her interest lacks the requisite nexus to the SUA Offenses charged in Counts One, Two, Six, and Seven of the Information, and is therefore not forfeitable.10
In addition to the ongoing renovations, DIPASCALI made other significant improvements to the Bridgewater Property since its purchase. This Office anticipates that the sale price of the Bridgewater Property will be significantly higher than the appraised value. Because the Money Laundering Offense to which the defendant pleaded guilty was alleged to have commenced “at least as early as in or about 2002,” the Government does not take the position that the $200,000 may also be forfeitable as property involved in money laundering activity, or property traceable to such property, pursuant to 18 U.S.C. § 982. 19
Based upon the readily provable facts available at the present time, in
consideration of the other facts and circumstances of this case, and in furtherance of the Government’s intent to distribute, as soon as practicable, the net proceeds from the sale or other disposition of the forfeited property to victims of the offenses of which DIPASCALI was convicted, the Office concluded that this is an appropriate case in which to exercise its authority to compromise claims under 21 U.S.C. § 853(j)(2).11 49. Because Joanne DiPascali’s interest in the Bridgewater Property is not readily
ascertainable, the Government used her $200,000 interest in the proceeds of the sale of the Rector Road Property as the starting point for determining an appropriate compromise figure. Applying interest rates set by the Internal Revenue Service as the “[a]pplicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder of reversionary interest,” that $200,000 would have appreciated to $284,867.37 as of January 1, 2010, or in excess of $285,000 as of the date of this application.12 The parties have therefore agreed, in furtherance of their desire to avoid protracted litigation and subject to the Court’s approval, to permit Joanne DiPascali a claim of $285,000. 50. The Government and Joanne DiPascali agreed to further reduce that sum by
certain offsets for the following amounts already paid out or otherwise accounted for: (a) $56,175
As Judge Rakoff recently recognized in the context of another large-scale fraud, courts are justified in approving the Government’s compromise of third party petitions even where the Government might ultimately prevail on the merits in the ancillary proceedings, because the risk of litigating such petitions can result in a delay or diminishment of recovery for victims. See Dreier, 2010 WL 424706, at *3.
The Government applied this rate because the parties anticipate that the net recovery from Joanne DiPascali’s allowed claim will be used to pay her living expenses, and will be her only significant asset or source of income for the foreseeable future. 20
was offset against money on deposit in five bank accounts in the names of Joanne T. DiPascali and two of her children, Dorothy R. DiPascali and Frank M. DiPascali; (b) $39,535 was further offset to account for the family’s rent and health insurance expenses for calendar year 2010, prepaid in December 2009 and January 2010; and (c) $11,308 was offset to account for various smaller payments made by Joanne DiPascali between late 2009 and January 2010. Taken together, therefore, the parties agreed that $107,018 should be set off against the $285,000 claim, resulting in a net payment of $177,982. The Stipulation and Order Between the Office and the Defendant’s Sister 51. Finally, the Government has entered into an agreement with DIPASCALI’s sister
to repay $504,459.76 of fraud proceeds that she received before she learned about the fraud. 52. In the Preliminary Order, DIPASCALI has agreed to forfeit those funds, which
will therefore be used to compensate victims, pending the Court’s approval. Specifically, the forfeitable property pursuant to the Preliminary Order includes proceeds the defendant or his wife transferred to third parties (excluding bona fide purchasers who were reasonably without cause to believe that the property was subject to forfeiture). Two transfers to the defendant’s sister — $425,000 on or about May 18, 2007, and $45,757.78 on or about August 28, 2007 — have already been recovered and repaid with interest. 53. In late December 2009, the defendant, his sister Joanne DiPascali, and the
Government executed a proposed Stipulation and Order embodying the repayment agreement, and the defendant’s sister has since paid to the Government $504,459.76, the entire principal and interest due. Those funds are on deposit in the USMS Seized Assets Deposit Fund pending entry of a Final Order of Forfeiture. 21
CONCLUSION 54. The Government intends that all of the forfeited property be sold, and the net
proceeds distributed to the victims of DIPASCALI’s fraud. Specifically, at the appropriate time, the Government intends to make an application pursuant to 18 U.S.C. § 3663A(c)(3) — as it did in the criminal case against Madoff — and ask the Court to find that the number of identifiable victims is so large as to make restitution impracticable, and that determining complex issues of fact related to the cause or amount of the victims’ losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to the victims is outweighed by the burden on the sentencing process. The Government will therefore ask the Court to find that restitution is impracticable and therefore to allow the Government to proceed with its intention to distribute the net proceeds from the sale of the forfeited assets to victims through the process of remission, consistent with the applicable Department of Justice regulations. See 21 U.S.C. § 853(i)(1) and 28 C.F.R. Part 9. Returning forfeited assets to victims through remission is a mechanism the Government has employed in other cases of large-scale fraud. See, e.g., In Re W.R. Huff, 409 F.3d at 563-64; United States v. Ebbers, S3 02 Cr. 1144 (BSJ). 55. Before those assets can be liquidated and the proceeds distributed, however, the
Government must obtain a final order of forfeiture. The three agreements for which the Government seeks approval in this application are the next step in that process — pursuant to the agreements, the defendant and his family’s claims to the forfeited assets will be finally resolved, and the time for third parties to make claims against those assets will begin to run. Once the requisite time period for filing claims has expired, the Government will promptly resolve or seek adjudication of any third-party petitions and, ultimately, a final order that will make the forfeited 22
assets available for distribution to victims through the remission process. 56. For the foregoing reasons, the Government respectfully requests that the Court
enter (a) the proposed Preliminary Order of Forfeiture (Final as to the Defendant) as to FRANK DIPASCALI, JR., the defendant, which is attached hereto as Appendix 1; (b) the proposed Stipulation and Order between the Office and the defendant’s wife, Joanne T. DiPascali, which is attached hereto as Appendix 2; and (c) the proposed Stipulation and Order between the Office and the defendant’s sister, Joanne DiPascali, which is attached hereto as Appendix 3.13 57. On February 23, 2010, this Court entered an order releasing the defendant from
detention subject to certain stringent conditions, including the entry of orders resolving the forfeiture claims of the defendant and his wife. The Government respectfully requests that, pursuant to footnote 1 of that Order, the Court enter an order providing victims one week within which to comment on the proposed orders by sending an e-mail to usanys.madoff@usdoj.gov. The Government will collect all such comments and will forward them to the Court. 58. Marc L. Mukasey, Esq., counsel for the defendant and for Joanne T. DiPascali,
consents to the entry of the Preliminary Order of Forfeiture and asks the Court to endorse the Stipulation and Order. 59. No previous request for the relief sought has been made.
The proposed Preliminary Order and proposed Stipulation and Order attached as Appendixes 1 and 2 to this application are final, and are currently being circulated for signature by the parties. The Government will file a notice attaching the fully-executed documents once they are available, which should in any case be before the victim comment period expires. The proposed Stipulation and Order attached as Appendix 3 to this application is final and fully executed. 23
Dated: New York, New York April 21, 2010 Respectfully submitted, PREET BHARARA United States Attorney
/s/ BARBARA A. WARD Acting Chief, Asset Forfeiture Unit MATTHEW L. SCHWARTZ Assistant United States Attorney 1 Saint Andrew’s Plaza New York, New York 10007 Tel.: (212) 647-1048/1945 Fax: (212) 637-0421/2937 E-mail: barbara.ward@usdoj.gov matthew.schwartz@usdoj.gov
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Madoff: Forfeiture motion in Frank Dipascali case by mrspanstreppon453 viewsEmbedDownloadDescriptionComprehensive list of Frank Dipascali's assets to be forfeited. Also see three appendixes.Comprehensive list of Frank Dipascali's assets to be forfeited. Also see three appendixes. Interests: Types, Business/Law, Court FilingsRead on Scribd mobile: iPhone, iPad and Android.Copyright: Attribution Non-Commercial (BY-NC)Download as PDF, TXT or read online from ScribdFlag for inappropriate contentShow moreShow less
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