Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19880701_0040476.C02.htm/qx
Timestamp: 2017-01-22 04:15:41
Document Index: 140476426

Matched Legal Cases: ['§ 853', '§ 853', '§ 853', '§ 801', '§ 853', '§ 853', '§ 853', '§ 853', '§ 1963', '§ 853', '§ 1963', '§ 853', '§ 853']

| United States v. Peter Monsanto
United States v. Peter Monsanto
UNITED STATES OF AMERICA, APPELLEE,v.PETER MONSANTO, DEFENDANT-APPELLANT
Rehearing in banc of appeal from order entered in the United States District Court for the Southern District of New York, Robert J. Ward, J, denying appellant's motion regarding the restraint and "relation back" provisions of Comprehensive Forfeiture Act of 1984, 21 U.S.C. §§ 853(c), 853(e)(1)(A). Monsanto challenges the order on the ground that it deprived him of funds needed to retain defense counsel of choice. Vacated and remanded.
Feinberg, Chief Judge, Oakes, Meskill, Newman, Kearse, Cardamone, Pierce, Winter, Pratt, Miner, Altimari and Mahoney, Circuit Judges.
This is an appeal from an order of the United States District Court for the Southern District of New York, Robert J. Ward, J., denying a motion to vacate or modify an ex parte post-indictment restraining order entered pursuant to a provision of the Comprehensive Forfeiture Act of 1984 (CFA), 21 U.S.C. § 853(e)(1)(A) and for a declaration that fees paid to appellant's defense counsel would be exempt from post-conviction forfeiture pursuant to the "relation back" provision of the CFA, 21 U.S.C. § 853(c). The appeal was originally heard by a panel of the court, 836 F.2d 74 (2d Cir. 1987), and has been reheard in banc.
The relevant facts of this case, which are described in greater detail in the panel opinion, are as follows. In an indictment unsealed in July 1987, Peter Monsanto was indicted on various RICO, narcotics, continuing criminal enterprise and firearms charges. The indictment specified two parcels of residential real property, valued at $335,000 and $30,000, as well as $35,000 in cash, as "constituting and derived from the proceeds" of violations of Title III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. § 801 et seq., and thus subject to forfeiture pursuant to 21 U.S.C. § 853(a). The district court entered an ex parte restraining order pursuant to 21 U.S.C. § 853(e)(1)(A) prohibiting Monsanto from transferring or encumbering the residential properties.
In August 1987, Monsanto moved to vacate or modify the restraining order, seeking use of the restrained assets to retain private trial counsel and a declaration that fees paid to such counsel would be exempt from post-trial forfeiture. He argued that Congress did not intend the CFA to apply to property needed to pay legitimate attorney's fees and that if the statute did apply to such property it would violate his sixth amendment right to counsel of choice. He challenged not only the post-indictment restraint provision, 21 U.S.C. § 853(e)(1)(A), but also the post-conviction "relation back" provision, 21 U.S.C. § 853(c), which allows the government to seek post-conviction forfeiture of property transferred to third persons, unless such persons establish that they were bona fide purchasers for value who at the time of the purchase were reasonably without cause to believe that the property was subject to forfeiture.
The government argues that since United States v. Salerno, 481 U.S. 739, 107 S. Ct. 2095, 95 L. Ed. 2d 697 (1987), held that a defendant may be detained pending trial, the restraint on a defendant's property here (as opposed to his liberty) must be permissible. The argument seems persuasive at first blush, but on further analysis it is not. Salerno stands for the proposition that an accused's liberty interest may sometimes be overcome by the compelling government interest in coping with an immediate threat to public safety. Here there is no government interest anywhere near as compelling as that. Nor is the restraint here on property alone. The restraint affects the right to counsel of choice, which in turn affects important liberty interests.
The Government should not be permitted to cripple the defendant at the outset of the [trial] by depriving him of the funds he needs to retain counsel. . . .
The relevant provisions of the Comprehensive Forfeiture Act, Pub. L. No. 98-473, 98 Stat. 2040 (1984), are drafted in permissive--"may"--rather than mandatory--"shall"--terms. See 18 U.S.C. § 1963(e) (Supp. IV 1986); 21 U.S.C. § 853(e)(1)(A) (Supp. IV 1986). Because of the "may" language and the lack of any evidence of congressional intent to the contrary, I read the Act to vest district courts with the discretionary power to restrain assets identified in an indictment as subject to forfeiture. The exercise of that discretion is to be guided by traditional equitable principles that balance the relative hardships to the parties. The government has no interest derived from the Act in preventing a defendant from making ordinary lawful expenditures during the period from indictment to conviction, including expenditures for the retention of private counsel. Similarly, the forfeiture provisions governing transfers to third parties are also discretionary, 18 U.S.C. § 1963(a)(3) (Supp. IV 1986); 21 U.S.C. § 853(c) (Supp. IV 1986), and at the very least, must exempt from forfeiture any payments authorized by the court under Section 853(e)(1). If that interpretation is correct, the due process and sixth amendment issues need not be addressed. I therefore concur in the judgment of the court. My reasons follow.
The so-called restraint provision of the Act, 21 U.S.C. § 853(e)(1) provides in pertinent part:
(A) upon the filing of an indictment or information charging a violation of this subchapter or subchapter II of this chapter for which criminal forfeiture may be ordered under this section and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section; . . .
I am frankly puzzled why a statutory provision with such permissive language has been read by so many courts to authorize as a routine matter, much less require, the most draconian of restraints on a defendant's assets without giving any consideration to the hardship such a restraint imposes. Indeed, the established canon of statutory construction is to favor the retention of full equitable powers by courts absent a clear statement of a contrary legislative intent. Unless Congress "in so many words, or by a necessary and inescapable inference, restricts the court's jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied." Porter v. Warner Holding Co., 328 U.S. 395, 398, 90 L. Ed. 1332, 66 S. Ct. 1086 (1946); accord, e.g., Amoco Prod. Co. v. Village of Gambell, 107 S. Ct. 1396, 1402-03, 107 S. Ct. 1396, 94 L. Ed. 2d 542 (1987); Brown v. Swann, 35 U.S. (10 Pet.) 496, 503 (1836) ("The great principles of equity, securing complete justice, should not be yielded to light inferences, or doubtful construction."). We thus should not lightly presume that Congress, in enacting the Act, intended to dispense with "the requirements of equity practice" and their "background of several hundred years of history," Hecht Co. v. Bowles, 321 U.S. 321, 329, 88 L. Ed. 754, 64 S. Ct. 587 (1944), a history "of which Congress is assuredly well aware." Weinberger v. Romero-Barcelo, 456 U.S. 305, 313, 72 L. Ed. 2d 91, 102 S. Ct. 1798 (1982).
Even if Congress had used the word "shall" instead of "may," there is caselaw holding that an exercise of equitable discretion would still be required. For example, the Emergency Price Control Act of 1942 provided that in certain circumstances "a permanent or temporary injunction, restraining order, or other order shall be granted without bond." Brown v. Hecht Co., 78 U.S. App. D.C. 98, 137 F.2d 689, 690 (D.C. Cir. 1943), rev'd sub nom. Hecht Co. v. Bowles, 321 U.S. 321, 88 L. Ed. 754, 64 S. Ct. 587 (1944). Nevertheless, the Supreme Court concluded "that 'shall be granted' is less mandatory than a literal reading might suggest." 321 U.S. at 328. The Court noted "that if Congress had intended to make such a drastic departure from the traditions of equity practice, an unequivocal statement of its purpose would have been made." Id. at 329.
In addition, the legislative history of the Act supports the conclusion that courts retain their full equitable powers in issuing orders under Section 853(e)(1). The Senate Report expressly indicates that district courts may hold hearings concerning restraints on a defendant's assets imposed under that Section. See S. Rep. No. 225, 98th Cong., 1st Sess. 191, 203, reprinted in 1984 U.S. Code Cong. & Admin. News 3374, 3386 ("This provision does not exclude . . . the authority to hold a hearing subsequent to the initial entry of the order and the court may modify the order or vacate an order that was clearly improper . . . ."). The legislative history is clear, however, that this hearing is not to inquire into the evidentiary strength or weakness of the government's case on criminality. Immediately after noting that a hearing may be held and "the court may modify the order," the Senate Report states :
S. Rep. No. 225, at 203, reprinted in 1984 U.S. Code Cong. & Admin. News at 3386.
It seems almost self-evident that if the purpose of the hearing is not to test the government's evidence of criminality, then its purpose must be to allow an informed balancing of the relative hardships on the parties according to traditional principles of equity with regard to pre-conviction restraints upon a defendant's assets. For reasons stated below, that balance should be struck so as to allow a defendant to continue to make ordinary lawful expenditures, including expenditures to retain private legal counsel. These expenditures should be controlled, however, to prevent the defendant from making unusual expenditures for luxuries in anticipation of a conviction and forfeiture, from executing sham transfers, and from using assets for criminal purposes. In short, the court may seize the assets of a defendant but should allow controlled ordinary lawful expenditures.
The Act authorizes preconviction restraint in order to protect the government's right to a postconviction forfeiture. In weighing the potential hardship on the government with regard to a preconviction restraint on a defendant's assets, therefore, we must scrutinize its interest under the Act in ultimately obtaining a forfeiture of those assets. Although the Act's relation-back forfeiture provision gives the government a nominal property right in potentially forfeitable assets, this property right is derived solely from the government's interest in crime control. For example, the government expressly disclaimed at oral argument any interest in criminal forfeitures under the Act as a means of raising revenue.*fn1 The mere fact that the assets ultimately forfeited after conviction may be less than if a total pre-conviction restraint had been imposed does not, therefore, contravene any purpose of the Act. Cases involving the seizure of property where revenue raising purposes are implicated are thus inapplicable. Similarly, United States v. Salerno, 481 U.S. 739, 107 S. Ct. 2095, 95 L. Ed. 2d 697 (1987), which upheld a restraint on the person of a defendant, was based on the government's interest in preventing that defendant from committing crimes in the pre-conviction period.
S. Rep. No. 225, at 191, reprinted in 1984 U.S. Code Cong. & Admin. News at 3374 (footnote omitted).
There is nothing in the language or legislative history of the Act indicating that Congress hoped to eradicate criminal organizations or to deter racketeering or narcotics trafficking by imposing financial penalties upon defendants before conviction and forfeiture. In the only passage remotely supporting a contrary view, the Senate Report stated that the restraint provision was intended only "to preserve the availability of a defendant's assets for criminal forfeiture and, in those cases in which he does transfer, deplete, or conceal his property, to assure that he cannot as a result avoid the economic impact of forfeiture." Id. at 196, reprinted in 1984 U.S. Code Cong. & Admin. News at 3379 (emphasis added). The "depletions" with which Congress was concerned were thus only those that enable a defendant to avoid the economic impact of a post-conviction forfeiture. Unlike unusual lavish expenditures to accelerate consumption in the pre-trial period, transfers to friends or relatives as a desirable alternative to forfeiture, or transfers for purposes of concealment, ordinary lawful expenditures do not enable a defendant to avoid the economic impact of a post-conviction forfeiture, because such expenditures would have been made without regard to the prospect of such a forfeiture. A pre-trial restraint on ordinary lawful expenditures on the other hand irreparably imposes the economic impact of forfeiture before conviction. Read as a whole, the legislative history ...