Opinion ID: 1249305
Heading Depth: 1
Heading Rank: 3

Heading: The District Court's Order of Detention

Text: On May 22, a grand jury sitting in the Eastern District of New York returned the pending indictment against defendants. Appearing before District Judge Thomas C. Platt on May 24, the government sought to reopen bail proceedings. It asserted that the defense has not even come close to meeting their burden to rebut the risk of flight in terms of providing the government and the court with adequate information regarding the defendants' financial history, financial details, the corporation they control, their contacts overseas. Tr. May 24, 2007, at 9. [5] The government questioned the credibility of defendants' financial representations with respect to both the value of their securities holdings and their access to overseas accounts. The government noted that, within the past five years, Mahender Sabhnani had engaged in financial transactions totaling $850,000 with his brother Ashok Sabhnani in Dubai. The government also noted that defendants subcontracted some of their manufacturing operations to two companies in the United Kingdom. We have no indication whatsoever of the relationship between the Sabhnanis and those companies. Do they own those companies? Do they have interests in those companies? Do those companies maintain bank accounts for the benefit of the Sabhnanis? We don't know. Id. at 21. Defense counsel indicated their clients' willingness to provide further financial information. They noted only that previous inquiries to the government as to whether additional information might permit agreement on bail release had been met with a singular response: We want to see these people detained. Id. at 23. The district court directed the government to provide the defense with a detailed list of any questions regarding defendants' assets, and it adjourned further consideration of bail pending the parties' communications. In a letter dated May 24, 2007, the government sought defense production of nineteen categories of information. [6] Defendants did not oppose these extensive requests. Instead, either directly or through their accountant, they produced some 15,000 pages of material.
Appearing before Judge Platt on May 30, the government submitted that defendants' response to its May 24 letter raised new concerns about their assets. Specifically, the disclosed documents revealed defendants' control over more than sixty personal and business accounts at some thirty-eight financial institutions. Among these were securities accounts appropriately valued at approximately $4 million, rather than $3 million as initially reported to Pre-Trial Services. One of these security accounts, which was in the name of defendants' minor son, had been used in March 2004 to repay a $214,704 obligation to Mahender Sabhnani's brother Ashok. A September 2005 statement for the account showed holdings valued at approximately half a million dollars. Defendants offered to answer any questions regarding these accounts and transactions, but they requested the district court to order release without further delay. After hearing from the parties, the district court proceeded to summarize where I am on the question of bail and where I think you ought to go, if it is possible to go that way. Tr. May 30, 2007 at 43. The court first observed its general satisfaction with the dollar amount of the bonds ordered by Judge Tomlinson: [T]he question of the risk of flight is one that I think has, not completely but for the most part, [been] taken care of in [Judge Tomlinson's] decision with respect to the million dollars worth of bond from the husband, million dollars bond put up as security, and the $2-1/2 million from the wife, and the fact that the house itself is subject to the forfeiture in this case, and various other aspects of that. Id. Nevertheless, the district court indicated the need for more restrictive conditions of home confinement. Specifically, it directed the parties to explore arrangements for round-the-clock surveillance of defendants and their home by either government agents or private security personnel to make sure there is no impermissible access to the people in the house by telephone, by wire, by internet, [7] and certainly by physical access other than members of the family, and the requirement that they all be subject to search, entering or leaving the premises. Id. at 45. In such circumstances, the court observed, there would be no danger of [defendants] fleeing because they would be under constant guard. Id. The court instructed the government to put in all the safeguards it thought necessary to ensure the effectiveness of such round-the-clock security, and it directed defendants to bear any expenses. Id. at 46. The court noted the need to give particular attention to monitoring defendants' children to make sure that they are not errand boys for messages between the defendants and anybody outside of the country or anywhere that would cause problems here. Id. at 47. The court advised the parties that, if they could not reach agreement in the next few days, I will set up a set of conditions for home detention. Id. at 48. On May 31, defense counsel advised the district court that the parties had reached agreement on bail conditions conforming to the court's directives of May 30. The government did not dispute this representation. [8]
When the parties appeared before the district court on June 4 to discuss stipulated conditions for release, Judge Platt expressed dissatisfaction with their proposal, specifically, the failure adequately to guarantee defendants' payment of all costs, to provide 24-hour security inside and outside defendants' home, and to prohibit access to the home by anyone other than defendants and their children. The court indicated that defendants should make some advance payment on the security costs, that unmonitored access points to defendants' home should be sealed, that at least two private security officers should serve on each surveillance shift, and that defendants' children should be searched on entering and leaving the family home. Both the government and the defense proposed to redraft the stipulation to address the court's concerns. On June 5, defense counsel forwarded a new draft stipulation of conditions of release to the district court. That same day, the court issued an order stating that, When, as, and if the attorneys for the Defendants and the United States Attorney reach an agreement as to all the proposed terms of the Release, but not before, the Court will consider same and recall the same for further hearing therein. United States v. Sabhnani, 07-CR-429(TCP) (E.D.N.Y. June 5, 2007) (emphasis in original).
By letter dated June 6, 2007, the government informed the district court that it did not agree to defendants' release on any conditions. It had negotiated terms of home confinement with defense counsel only because it had understood the court, on May 30, to indicate its intent to release defendants on that condition. Renewing its request for detention, the government identified the following supporting reasons: (1) defendants had misrepresented their finances in their initial Pre-Trial Services interview by (a) underreporting their securities holdings by $1 million, (b) neglecting to disclose ownership of $500,000 in jewelry, and (c) failing to mention their control of over sixty accounts at thirty-eight financial institutions giving them access to approximately $5 million rather than $3.3 million as reported to Pre-Trial Services; (2) they had extensive personal and business ties to foreign countries with which the United States had no extradition treaty; (3) they had failed fully to explain money transfers of $850,000 between defendant Mahender Sabhnani in the United States and his brother in Dubai or to clarify whether Mahender Sabhnani had power of attorney over accounts in his brother's name; (4) defendants had not supplied satisfactory documentation for transfers of over $17 million into their business accounts or explanations for record discrepancies regarding transfers totaling $10 million out of these accounts; (5) the reliability of defendants' 2005 tax returns was uncertain and defendants had yet to file a 2006 return; (6) the exact contents of defendants' nine safety deposit boxes were unknown; and (7) the strength of the government's case against defendants and the probability of a lengthy term of incarceration gave them a motive to flee. On June 8, defense counsel submitted to the district court what it presented as a final, revised version of the proposed conditions for release. Acknowledging the government's renewed opposition to release, counsel represented that [a]ll of the revisions and additions requested by the Government prior to the June 6 letter had been incorporated into the new proposal. Hoffman Letter, June 8, 2007, at 3.
On June 11, the district court ordered defendants' detention. See United States v. Sabhnani, 07-CR-429(TCP), Memorandum and Order (E.D.N.Y. June 11, 2007). Preliminarily, it emphasized that on May 30 it had not ruled that defendants were entitled to release on certain conditions. Rather, it had suggested that the parties attempt to come to an agreement as to terms of the release and submit said terms to this Court for approval. Id. at 5. Because the government opposed defendants' release on any conditions, the court was obliged to consider whether any conditions existed that would adequately mitigate any risk of flight. It concluded that there were not. In reaching this conclusion, the district court expressed concern with defendants' financial disclosures, noting their initial failure to identify all financial assets to Pre-Trial Services and their continued failure satisfactorily to explain certain financial transactions. The district court dismissed defendants' extensive record production in response to government inquiries as sending the Government on a fishing expedition. Id. at 10. The court further faulted defendants for misrepresenting the nature of their business by advising Judge Tomlinson that their factories operated in New York and New Jersey when, in fact, a significant part of their manufacturing operations was performed by subcontractors overseas. The court noted unanswered questions as to defendants' relationship with these overseas subcontractors. The court concluded that without an accurate picture of the Defendants' finances, both in the United States and abroad, it could not be assured that restraining orders will prevent the Defendants or family members acting on their behalf from accessing sufficient funds to support their flight from this country. Id. at 11-12. The district court observed that an order of detention was further supported by the strength of the evidence against defendants and the lengthy prison terms they would face if convicted. While acknowledging defendants' family and business ties in the United States, the district court considered these positive factors outweighed by defendants' ability to operate their business from any number of overseas locations. Finally, the district court concluded that home detention was impractical because it would require the imposition of onerous monitoring conditions on defendants' children, none of whom was charged with criminal conduct.
Defendants promptly appealed the order of detention, requesting expeditious review by this court. At oral argument on June 26, this court noted the extraordinary scope of the restraint on assets and conditions of home confinement agreed to by defendants. We asked the government to articulate precisely its reasons for thinking these restraints and conditions inadequate to assure defendants' presence at trial. In fact, each reason identified was met by a defense offer to accommodate the specified concern. For example, when the government noted that the proposed conditions were ambiguous as to whether private security officers would accompany defendants into religious services, defense counsel agreed to such a condition. When the government expressed concern that the proposed conditions provided for a private monitor rather than a government official to examine the contents of defendants' safety deposit boxes, counsel indicated defendants' willingness to submit the boxes to government inspection. Because these exchanges strongly suggested that conditions of release that would assure defendants' presence at trial could be identified and agreed to by the parties, this court directed the government to amend the last bail proposal to incorporate therein any and all further conditions it deemed necessary to mitigate the risk of flight. The government has now complied with that request, and defendants have indicated their willingness to abide by the amended conditions of release. [9]