Free Motion for Reconsideration - District Court of Arizona - Arizona


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PAUL K. CHARLTON United States Attorney District of Arizona Reid C. Pixler Assistant U.S. Attorney Arizona State Bar No. 12850 Two Renaissance Square 40 North Central, Suite 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Plaintiff, v. 1. Lear Jet, Model 31A, Serial Number 31A-224, U.S. Registration # N224LJ; 2. Agusta Helicopter, Model A109E, Serial Number 11116, Mexican Registration # XA-TSR; 3. Cessna Caravan, Model 208B, Serial Number 208B-0941, Mexican Registration # XA-TUF. Defendants. PRELIMINARY STATEMENT The plaintiff, United States of America, by and through its attorney, Reid C. Pixler, CIV-04-363-PHX-JWS
MOTION TO RECONSIDER RE: ORDER FROM CHAMBERS DATED AT ANCHORAGE, ALASKA JULY 26, 2005

ORAL ARGUMENT REQUESTED

20 Assistant United States Attorney, respectfully moves this Honorable Court to Reconsider the 21 Order cited above on the basis that it contains substantial errors of both fact and law, based upon 22 a misunderstanding of the EVIDENCE OF SERVICE OF IN REM PROCESS IN MEXICO, 23 filed with the Court by plaintiff, hereafter referred to as Exhibit C, on or about April 19, 2005. 24 Specifically, the order dismissing defendants 2 and 3 appears to be based solely upon a finding 25 that the aircraft have not been "seized" in Mexico because they are still authorized to fly to any 26 location in Mexico, and not brought into the District of Arizona. As will be fully established 27 below, that conclusion fails to consider the impact of a substitute custodian agreement, as 28 recognized in federal forfeiture law, also recognized in Mexican law, and which was specifically

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1 requested by the U.S. Department of Justice. Please see Exhibit D attached hereto and hereby 2 incorporated by this reference. In short, the fact that the aircraft are authorized to continue to 3 operate is not dispositive of the issue of whether process has been served in Mexico sufficient 4 to afford this Court jurisdiction to consider the case. Any argument to the contrary is specious. 5 An additional reason for the reconsideration of the motion is that prior to the July 26th Order

6 of this Court, unknown to plaintiff, Mexico had taken actual physical custody of the aircraft, on 7 or about February 7, 2005. Please see Exhibits E and F, attached hereto and hereby incorporated 8 by this reference. Plaintiff has only just received this document and has had the opportunity to 9 informally translate the first few pages which announce the fact that the aircraft have been taken 10 into custody of the PGR and placed into the custody of a specialized unit of the government of 11 Mexico called the S.A.E. which is responsible for the physical possession and custody of the 12 seized property. Prior to the entry of the Order of this Court, the aircraft had actually been 13 "Immobilized" although the plaintiff maintains such action was not required in order for this 14 Court to exercise jurisdiction over the aircraft. The balance of Exhibit E relates to administrative 15 details of the relocation of the aircraft and will not be further translated, absent an Order from 16 the Court. 17 In the alternative, if the Court will not reconsider its order, then the United States moves this

18 Honorable Court to transfer this matter to the United States District Court for the District of 19 Colombia which clearly has both venue and jurisdiction to hear this case, pursuant to 28 U.S.C. 20 § 1355(b)(2). The United States had suggested this alternative to counsel for claimant Abed in 21 lieu of litigating this issue at the time the first motion was filed. Counsel never responded to the 22 proposal. 23 In the event that the Court will neither reconsider the Order nor transfer this case to the

24 District of Colombia, then the United States requests this Court to enter a Final Judgment 25 pursuant to Fed.R.Civ.P. 54(b) regarding defendants number 2 and 3 which includes claims 26 number 1, 2, 3, and claim number 5 relating to the registration of defendant number 1, in order 27 for plaintiff to take an immediate appeal to the Ninth Circuit Court of Appeals. 28
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FACTUAL SUMMARY OF EVIDENCE OF SERVICE OF IN REM PROCESS BY MEXICO AS DETAILED IN THE MATERIAL FILED WITH THE COURT ON APRIL 19, 2005, AND REFERRED TO AS EXHIBIT C The service of in rem process may, but is not required to, immobilize the res. In

4 this factual setting and for reasons discussed with Mexico, and further elaborated herein, plaintiff 5 requested that the aircraft be seized, but released in the custody and under the supervision of the 6 government in the form of a substitute custodian agreement. This is an acceptable form of 7 service of the warrant of arrest in rem as detailed in Exhibit D, specifically including the use of 8 a substitute custodian agreement. Mexico has fully complied with the request made by plaintiff 9 and has demonstrated its willingness to comply with and follow the Orders of the District Court 10 for the District of Arizona. With respect to the service of process in Mexico consider all of the 11 efforts to carry out that process as provided in Exhibit C, pages 31-45, paragraphs 23 to 41; the 12 agreement which plaintiff would call a substitute custodian agreement appearing at pages 46-50, 13 and the notices of service provided to the identified representatives in Mexico, appearing at 14 pages 51-56. There can be no question of the good faith exhibited by Mexico in attempting to 15 carry out this task. 16 2. Exhibit E demonstrates that something transpired which violated the terms of the

17 agreement by which the company leasing the aircraft violated the terms of the agreement, and 18 both defendant #2 and #3 were taken into actual physical custody exclusive of the interest of the 19 rights the SIASA, the company leasing the aircraft from the owner. 20 3. The interest sought to be forfeited by plaintiff is the ownership interest of the

21 aircraft, not the interest of the aircraft represented by the lease to SIASA. The ownership interest 22 in the aircraft as it was represented in the action in Mexico is the stream of lease payments from 23 SIASA, which merely operated the aircraft. The lease payments from SIASA, representing the 24 ownership interest, have been deposited into accounts of the PGR of the Mexican government 25 and were so required pursuant to the agreement negotiated with SIASA. Plaintiff would refer 26 to this agreement as a Substitute Custodian Agreement if it were used in the District of Arizona, 27 but it is a procedure regularly used in the United States. See Exhibit C, pages 46 to 50 for the 28
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1 form of the agreement, as requested by plaintiff in Exhibit D. Page 50 specifically addresses the 2 deposit of the lease payments, representing the ownership interest in the aircraft. This procedure 3 is used by both the governments of Mexico and the United States to seize, secure, and take into 4 custody property which is the subject of a forfeiture or confiscation suit where the company or 5 individual found in possession of the item is not the owner and has some right, such as a lease, 6 which authorizes them to use the the property. In the situation, such as the one involving 7 SIASA, if the two aircraft were immediately seized and no provision was made for a substitute 8 custodian, then there would be a substantial likelihood of unintentional harm to an entity not 9 directly involved in the underlying criminal activity. In this context, plaintiff was willing to 10 utilize the substitute custodian approach to avoid unintended consequences, particularly where 11 the in rem process could be performed without the requirement of immobilization of the aircraft. 12 4. Throughout Exhibit C it is absolutely clear that the government of Mexico is

13 attempting to comply with the requests by plaintiff to carry out the service of process of this 14 Court, to the best of its ability under the terms of the Mutual Legal Assistance Treaty: 15 16 17 18 19 20 21 The objective of said request was to immobilize and secure two airships and to also serve notice of two Court Orders to Confiscate in rem. Since the request for legal services submitted by the U.S. authorities complies with the provisions of the Cooperation Treaty between the United States of Mexico and the United States of America in regards to Mutual Legal Services, this Special Unit is asked to intervene to undertake all possible measures in order to immobilize and secure the two airships (Cessna and Augusta), which seem to be secured in this country (in relation to the events being investigated) so that said airships can be sent back to the United States of America, and to also serve the Court Orders to Confiscate in rem (which are attached duly certified and together with the corresponding translation into the Spanish language), these to be served to whom it may concern; all this part of the investigation in the present criminal investigation referred to here, said document having been translated into Spanish, the following is acknowledged:

22 Exhibit C, page 1. 23 Exhibit C also includes quotations from the domestic law of Mexico regarding the

24 securing or seizing of evidence and instrumentalities of crime, beginning at page 6 under the 25 section captioned CONCLUSIONS OF LAW from which the following excerpts are taken: 26 27 28 Article 123. As soon as the Office of the District Attorney or the agents in charge of a criminal investigation have knowledge that a crime that should be prosecuted has probably been committed, they will take all measures and issue all necessary orders to:
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provide security and help to the victims; prevent any prints or traces of the crime from being lost, destroyed or altered, as well as the instruments or objects or effects of same; ... Article 181. All instruments, objects or products of the crime, as well as any property having fingerprints or that could be related to said crime, are to be secured in order to avoid any tampering or that they be destroyed or should disappear. The secured property will be managed according to the applicable law. Those authorities assisting the District Attorney will immediately place the above mentioned property at the disposal of the prosecutor. The District Attorney will then decide the manner in which to secure said property. ... In the present criminal investigation there are sufficient elements of evidence with which to apply the provision remedy of securing (attachment) ** the airships Registration: XA-TUF, MAKE AND MODEL: CESSNA 208B. SERIAL NUMBER: 208B0941; AND REGISTRATION: XA-TSR. MAKE AND MODEL: AUGUSTA A109E. SERIAL NUMBER: 1116. This action arises from the request made by the Justice Department of the United States of America to this acting Government Entity through the legal means of international legal services, as follows: ... 5. Mexico confirmed that defendant #3 was leased from Hartslope, Ltd. to SIASA

12 and provided a series of documents which confirmed this associated directed by Jaime Ross 13 Castillo, who has been involved in the underlying criminal activity identified in the complaint. 14 See Exhibit C, pages 11 to 15, Paragraph A 1 to 21. 15 6. Mexico confirmed that defendant #2 was leased from Casafin, Ltd. to SIASA and

16 provided a series of documents which confirmed this associated directed by Jaime Ross Castillo, 17 who has been involved in the underlying criminal activity identified in the complaint. See 18 Exhibit C, pages 15 to 16. 19 7. The Mexican and the Swiss investigations of Jaime Ross Castillo confirm that

20 money removed from the accounts of the Mexican victim Romero at Inverlat Bank were used 21 by Jaime Ross Castillo to purchase interests in each of the three defendants in this action. Ross 22 confirmed this fact to the Swiss in a portion of his statement. Exhibit C, page 25. 23 24 25 This money, that is, the US $2,000,000 was invested in three different places; the first in a company VUELAMEX, S.A. DE C.V., a company that wants to open a commercial line in Mexico. The second place was a helicopter that was purchased in the United States and is called Augusta Power 109 A. And the third in purchase options for Cessna planes in the United States.

26 See also paragraph 22 at page 31 regarding the funding for the Cessna, defendant #3. Ross also 27 executed a document allowing his interest in the aircraft to be forfeited by this Court. 28
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8.

Mexico has provided an extensive list of all of the efforts undertaken to serve the

2 process of this Honorable Court in Mexico upon all interested parties or potential claimants, 3 including the publication of the process in Mexico, beginning at Ex C, page 31, ¶ 23 and 4 continuing through page 56. The following outline identifies some of the major points. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 G. F. E. D. C. B. A. The directions to publish the in rem process in the Federal Official Gazette in two newspapers in a major circulation in Mexico City regarding the interest of Hartslope Ltd and SIASA. See Exhibit C, page 35, ¶ 33. Notice to the Mexican Aircraft Registry of the interest of the United States in the the defendant aircraft. See Exhibit C, page 36, ¶ 35. Official communications directed to the service of the in rem process for the repatriation of the aircraft to the U.S. See Exhibit C, page 37, ¶ 36. The inventory of defendant #2, the Augusta, when it was seized. See Exhibit C, page 37, ¶ 37. A report regarding the service of the process to secure defendant #3, the Cessna, and the recitation of the terms of the substitute custodian agreement with Mrs. Virginia Brondo Romero, a representative of SIASA, the company which leases defendant #3. See Exhibit C, pages 37-39, ¶ 38, specifically the top portion of page 38. The inventory of defendant #3, the Cessna, when it was seized. See Exhibit C, page 39, ¶ 39. The compliance with the request by plaintiff not to immobilize the aircraft but to use an alternative involving the substitute custodian in response to the letter of counsel for plaintiff, marked as Exhibit D. See Exhibit C, pages 39-43, ¶ 40, ¶41. There can be no question that the process utilized by Mexico is essentially the same as the substitute custodian provisions of the U.S. law: ACT OF SECURING THE OBJECT OF THE CRIME. The proceedings in a criminal trial are of public policy, and the disposition concerning the act of securing the object of the crime especially so, mostly
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1 2 3 4 5 Ex. C, p 41. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

when said crime has been proven, and the restitution to the injured party of those rights that were infringed upon by the violation of the criminal law are also of public policy. To allow a criminal act to effectively continue benefitting the delinquent to the detriment of the injured party goes against all the moral and legal principals of society whose most fundamental interest is rooted in the belief that its lawful life be safeguarded against all those that violate the law.

... even though article 181 of the Federal Code of Criminal Procedures provides for the Attorney General to secure the instruments of a crime, the things that are the object or the product of said crime and of whatever else contains traces of same, and only considers the obligation to give the affected party the opportunity to be heard in his own defense after the afore mentioned act of securing, this does not infringe upon the referred constitutional guarantee. This is so because, even though it is true that the cited act of securing produces the unavailability of the secured property until there is a final resolution, under the provisions of articles 40 and 41 of the Federal Penal Code it is also true that the effect of the act of securing does not imply a definitive loss of the property secured, nor of the possession or availability of same, since its effect consists in placing such property at the disposal of the investigating or judicial authorities in order to guarantee verification as to the body of a crime or confirmation of the strong suspicion of guilt of the accused on the one hand, or, on the other hand, the eventual restitution or compliance with the forfeiture imposed. Thus, by its very nature, this is a provisional or precautionary remedy that is not governed by the guaranteed right to a hearing. Ex C, page 42. H. As noted above, the provisional seizure of property in Mexico really relates more to whether a hearing is constitutionally required. The hearing provided for in this process is before the U.S. District Court in the District of Arizona, not a Court in Mexico, at least at this time. Therefore, the provisional seizure or securement is completely appropriate and consistent with Mexican law. Therefore, in accordance with all of the above, it is ordered to provisionally secure the airships registration number XA-TUF (EXTRA ALPHA TANGO UNION FOX), CESSNA AIRCRAFT 208B, SERIAL NUMBER: 208B0941 and the other one, XA-TSR (EXTRA ALPHA - SICTANGO SIERRA), MAKE AND MODEL: HELICOPTER AUGUSTA A109E, SERIAL NUMBER: 11116 because they are considered to be a product of those illegal activities related to the events under investigation within this Criminal Investigation. The provisional remedy ordered is justified by virtue of the fact that the evidence gathered during the investigation clearly offers a pattern of behavior on the part of the defendants indicating a tendency to hide the moneys that unequivocally demonstrates its illicit source by different movements through the financial system and the purchase of the airships. It is, therefore, deemed necessary to immobilize the cited airships in order
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to facilitate the investigations and secure the product of the crime so that it can be confiscated, if appropriate; and also to establish that any other actions that may arise involving moneys from illegal sources may be dealt with in an expedited manner. This order is also justified by the petition from the Justice Department of the United States of America prepared in accordance with the Fifty Second article of the Circular C/005/99 issued by the Attorney General of the Republic and based on the principal of international reciprocity in the exchange of information used to prevent and combat behaviors related to operations using illegal sources of funding (money laundering) and that was issued by an authority with which there already exists reciprocity in the exchange of information and in mutual cooperation, as is the United States of America; and a decision is therefore, reached.... Ex C, page 43. 9. It should be clear to all interested parties that substantial steps have been taken to

10 comply in every respect with the Orders of this Court. See Exhibit C, pages 31 to 33, ¶¶ 23 to 11 30; publication at page 35 ¶33. Please also note that the affidavit of Bernardo Miguel Arámburu 12 Melendez is a studied effort at half truth. While Mexican law provides that a provisionally 13 secured property can be maintained in the owner's possession, it clearly has not been done in this 14 situation. The aircraft was left in the possession of SIASA, the company leasing the aircraft 15 from the owner. The owner's interest, represented by the lease payments, has been deposited 16 into the accounts designated by the PGR. It could not be more clear that Mexico has complied 17 with the requirements of service of process of this Court's in rem process. Where different legal 18 systems converge to accomplish a joint end, it is to be expected that the process will accomplish 19 the specific end despite very different sounding labels and titles. The distinction relied upon by 20 the court at page 6 of its order is an example of elevating form over substances, and should be 21 reconsidered by the Court. 22 10. ICE Special Agent Miles has confirmed that the aircraft have been taken into

23 custody by the Mexican government based upon a seizure order executed February 7, 2005. See 24 Exhibit F. Please notice that this information was not included in the formal materials submitted 25 to plaintiff by which Mexico sought to prove that they had served the process of this Court. That 26 material was filed with the Court on or about April 19, 2005, after it was received through the 27 official channels of communication and translated into English. However, it can be presumed 28 that counsel for claimant Abed had actual knowledge the two aircraft had been taken into
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1 custody in Mexico during the approximately 100 days from the date of the seizure or securement 2 to the filing of claimants' RESPONSE TO PLAINTIFF'S NOTICE OF FILING EVIDENCE 3 OF SERVICE OF IN REM PROCESS, dated May 18, 2005. For the record, plaintiff is unaware 4 that a Notice of filing documents required by the Court is a pleading to which a response may 5 be filed. Plaintiff has moved under separate cover to strike this and other extraneous pleadings 6 filed by counsel for Abed. To date, no response has been received in opposition to the motion. 7 8 9 10 ARGUMENT CONSTRUCTIVE CONTROL The concept of "Substitute Custodian" has been a part of the admiralty law for a very long

11 time. It has been used to prevent hardship to those not directly involved in the acts which have 12 given rise to forfeiture, as well as a way to maintain the value of the asset in the hands of those 13 who operate or possess the res. In the following quotation, David Smith refers to the marshal, 14 but makes it clear at §9.01[3] at 9-10 that the reference is for simplicity and that a Customs 15 officer is also one of many people who are authorized to serve in rem process. It is absolutely 16 clear under U.S. federal law that a substitute custodian can be utilized to avoid physically taking 17 the res into custody, while appropriately serving the in rem warrant. 18 19 20 21 22 23 24 David B. Smith, 1Prosecution and Defense of Forfeiture Cases, Matthew Bender, §9.01[3], at 25 9-11. As Smith has noted, the government can take into consideration many different aspects 26 of the management of tangible property in the process of serving the warrant. A litmus test of 27 whether an individual res is immobilized is, therefore, inadequate to conclude whether the in rem 28 warrant has been served. The ultimate question is whether the res has been brought within the
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While the seizing agency is most commonly appointed as substitute custodian, a third party or even the claimant can play this role. For example, in the Cuban "Freedom Flotilla" cases, where hundreds of vessels were seized at the same time, the government entered into agreements whereby the owners or masters were allowed to retain possession of the vessels as substitute custodians. This arrangement served to minimize storage costs and at the same time maintain the vessels in good condition. In Food and Drug Act cases under 21 U.S.C. § 334, the court frequently appoints the manufacturing company or its officers to act as substitute custodian of the "seized" drugs or "devices" where storage of the same by the marshal would be burdensome or expensive, for example, where special refrigeration facilities are needed.

1 control of this Court. Compare the requirements imposed by plaintiff in Exhibit D with the 2 terms and conditions imposed upon SIASA by the government of Mexico. See paragraphs 3, 3 4, and 8 above, specifically including the agreement by which the aircraft were left in the 4 custody of SIASA, Exhibit C, pages 46-50. It is absolutely clear that Mexico has complied with 5 the requests of plaintiff, has served the warrants upon all interested parties in Mexico, has 6 published the notification required, and is demonstrating its willingness to comply with the 7 Order of this Court. 8 An example of the use of a special form of a substitute custodian agreement, referred to as

9 an "occupancy agreement" was at the heart of one of the most famous Supreme Court cases 10 involving forfeiture. James Daniel Good was arrested and subsequently plead guilty of state 11 charges involving the possession of 89 pounds of marijuana in his home in Hawaii. More than 12 four years later a federal forfeiture action was filed seeking the forfeiture of the house and 4 13 acres upon which it was located as real estate facilitating trafficking in controlled substances, 14 pursuant to 21 U.S.C. §881(a)(7). 15 16 17 The Government seized the property on August 21, 1989, without prior notice to Good or an adversary hearing. At the time of the seizure, Good was renting his home to tenants for $900 per month. The Government permitted the tenants to remain on the premises subject to an occupancy agreement, but directed the payment of future rents to the United States Marshal.

18 United States v. James Daniel Good Real Property, 510 U.S. 43, 47, 114 S.Ct. 492, 497-98 19 (1993). Rather than evict or remove the tenants, in essence "immobilizing" the house or 20 bringing it within the exclusive control of the the court, the government required the tenants to 21 execute an agreement which set out the conditions upon which the tenants could maintain the 22 physical possession of the real estate, subject to the terms and conditions, including payment of 23 rent, required by the government. 24 Analytically, the situation is exactly the same as presented to this Court with respect to

25 defendants #2 and #3. It was immaterial to the jurisdiction of the District Court, Ninth Circuit 26 Court of Appeals and the Supreme Court that the tenants were allowed to occupy the real estate 27 during the forfeiture litigation. The fact that the tenants were not excluded from the defendant 28 property did not prevent any of the Courts from exerting control over the res. Just as in the
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1 factual situation at hand, the fact that plaintiff and the government of Mexico agreed to use a 2 similar agreement to allow the company leasing the aircraft to continue to operate the aircraft 3 and pay the lease to the government, in rem jurisdiction is not prevented by the approach. 4 Rather, it is objective proof that Mexico has negotiated a substitute custodian agreement in the 5 process of bringing the defendant aircraft into the in rem jurisdiction of the Court. More telling 6 is that at the time claimant filed its response, the aircraft, unknown to plaintiff, had actually been 7 taken into custody pursuant to the service of the warrant. 8 A recent case addressing this issue was resolved in favor of the government by the Third

9 Circuit. In that case a District Court in New Jersey ordered forfeited certain funds held in 10 accounts in Dubai, United Arab Emirates (UAE) as proceeds of trafficking in heroin, based upon 11 an conspiracy investigation in New Jersey related to the delivery of 250 grams of heroin. The 12 funds were proceeds of a heroin trafficking operation which had existed for sixteen years headed 13 by Jalal. Jalal claimed the approximately $500,000 on deposit in Dubai came from real estate 14 sales in Pakistan and gold trading in Dubai. Clearly, the funds on deposit did not arise from the 15 seized 250 grams of heroin. At the request of the United States, the funds in the UAE were 16 "frozen" while the investigation continued. The government made a formal treaty request 17 seeking the seizure and forfeiture of the funds, and formally requested the UAE to serve the 18 warrants of arrest in rem pursuant to orders issued by the U.S. District Court for the District of 19 New Jersey. Based upon responses obtained from the officials of the UAE, the District Court 20 found that UAE would enforce the order of the District Court. 21 22 23 24 25 26 United States v. Contents of Account Number 03001288, Held in the Name of Tasneem Jalal, 27 344 F.3d 399, 403 (3rd Cir. 2003). The Third Circuit carefully considered the opinion of the D.C. 28 Circuit regarding in rem jurisdiction of property located in foreign countries, citing United
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After reviewing the relevant facts, the Court found that it had constructive control over the Defendant Accounts as of September 27, 1999, the date authorities in the UAE indicated that they would enforce a forfeiture order of a United States court. As a result, the Court concluded that it had in rem jurisdiction over the Defendant Accounts when the Government commenced the forfeiture proceedings. We find that the District Court had jurisdiction over the Defendant Accounts solely based on § 1355(b)(2).

1 States v. All funds in Account Nos 747.034/278, 747.009/278, & 747.714/278 Banco Espanol 2 de Credito, Spain, 295 F.3d 23, 27 (D.C. Cir 2002). 3 4 5 6 7 8 9 Accounts in the Name of Jalal, supra at 405. 10 All of the factors considered affirmatively by the Second Circuit in finding that the foreign In determining that § 1355 must be enforced, the D.C. Circuit reasoned that perhaps "a forfeiture order of a United States Court will not have its full effect until the res - the money - is brought within the territory of the United States," however, "Spain's compliance and cooperation determines only the effectiveness of the forfeiture orders of the district courts, not their jurisdiction to issue those orders." Id. at 27. We agree with this analysis and hold that the United States District Court for the District of New Jersey had jurisdiction to order the forfeiture of the Defendant Account located in the UAE based on § 1355(b)(2). The UAE's compliance and cooperation with this forfeiture determines only the effectiveness of the District Court's order, not its jurisdiction to issue that order.

11 res had been served in rem process are present before this Court with respective to the 12 constructive control of the res. From and after approximately February 7, 2005, the aircraft have 13 been immobilized by the government of Mexico. However, prior to that date, the res was in the 14 constructive control of this Court to the same extent it would have been if the aircraft had been 15 seized in the U.S. The government of Mexico had issued process indicating its willingness to 16 give effect to orders of this Court. There exists a mutual assistance treaty by which each country 17 aggress to assist the other regarding the forfeiture actions and have done so in this case; either 18 party may transfer forfeited assets and both may retain all or any portion of the funds; Mexico, 19 as a result of such a request, has served process, published notice, inventoried the res, and 20 required the lease payments to be deposited, not with the owner of the aircraft, but with the 21 accounts of the government of Mexico. 22 23 24 25 26 27 28
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We decline to adopt claimant's unduly narrow interpretation of constructive control, under which this history of demonstrated cooperation would be irrelevant, absent a binding obligation on the part of the United Kingdom to return the funds. In summary, although we do not today delineate the precise scope of what will constitute constructive control in future cases, we are satisfied that in the instance case the government has met its burden of demonstrating that the British government will turn over at least a portion of the seized funds to the United States, thereby vesting the district court with the requisite constructive control over the funds.

1 United States V. All Funds on Deposit in Any Accounts Maintained in the Names of Heriberto 2 Castro Meza, 63 F.3d 148, 154 (2nd Cir. 1995). (See also Banco Espanol, supra at 25) 3 (constructive possession was found based upon the degree of cooperation.) 4 5 6 VENUE This Court has clearly found that there is venue in the District of Arizona for the forfeiture

7 action filed in Phoenix. It has found that defendant #1, the Lear Jet, had sufficient acts or 8 omissions giving rise to the forfeiture within the District of Arizona, and denied the motion of 9 claimant to dismiss this defendant from the suit. However, the Court has incorrectly focused 10 upon the location of the acts associated with the aircraft, not the acts of those engaged in the 11 movement of the funds stolen from Inverlat Bank in Mexico, laundered throughout the world, 12 and then delivered to the United States for the purposes of purchasing the defendant aircraft. 13 It is not the acts of the aircraft which controls the venue of this forfeiture action, but the acts

14 of those involved in the money laundering, fraud, and the conspiracies to commit these crimes, 15 specifically including Ross Castillo. Ross Castillo has admitted that the funds belonging to 16 Romero, and which represent a substantial portion of the payments for the three defendant 17 aircraft, were moved through the accounts as alleged by plaintiff in the complaint and used to 18 acquire the aircraft. See the Ross stipulation for judgment filed with the Court. As alleged in 19 the complaint, this criminal enterprise has functioned within the District of Arizona, certainly 20 with respect to the Lear Jet. However, it is not material to the issue of venue that the money 21 laundering acts related to the purchase of defendants #2 and #3 were in other Judicial Districts. 22 23 24 25 26 27 28
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A forfeiture action is in rem. Jurisdiction in rem is predicated on the "fiction of convenience" that an item of property is a person against whom suits can be filed and judgements entered. (Citing case) The use of in rem forfeiture began at a time when jurisdiction was premised on territorial notions of sovereignty. (Citing case) This view of jurisdiction has evolved to one based on due process concerns for "fair play and substantial justice," International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)(quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)), even when the court's jurisdiction is predicated on its control over an item of property or res. Shaffer v. Heitner, 433 U.S. 186, 207, 97 S.Ct. 2569, 2581, 53 L.Ed. 2d 683 (1977) ("`judicial jurisdiction over a thing' is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.")

1 United States v. $10,000 in U.S. Currency, 860 F.2d 1511, 1513 (9th Cir 1988). This same case 2 was cited by Senator D'Amato when he introduced the Money Laundering Improvements Act, 3 stating that, "it is probably no longer necessary to base in rem jurisdiction on the location of the 4 property if there have been sufficient contacts with the district in which the suit is field." Banco 5 Espanol, supra at 26. Contacts with the district relate to the individuals who are involved in the 6 acts which give rise to forfeiture and is not limited to contacts by only the res. 7 To rule as this Court has done nullifies the entire purpose of the amendments to the statutes

8 regarding venue and jurisdiction. The effect of the ruling of this Court is to require the United 9 States to bring three separate actions around the country or file one action in the District of 10 Colombia, despite the intent of Congress and the clear language of 28 U.S.C. § 1355 (B)(1)(A): 11 12 13 (emphasis added) The test for venue is not whether the defendant aircraft have had sufficient 14 contact with the District, but whether the criminal enterprise, and individuals carrying out its 15 acts, have sufficient contact with the District such that the acts give rise to the forfeiture action. 16 As alleged in the complaint and admitted by Jaime Ross Castillo, substantial contact by that 17 criminal enterprise has been made in the negotiation of the sale for defendant #1. Therefore, the 18 District of Arizona has had sufficient contact with the criminal enterprise for the forfeiture action 19 to be brought within the District of Arizona, despite the fact the other defendants have not had 20 such contact. It is not appropriate in any regard to require multiple cases to be litigated on the 21 same facts alleged in this complain at different locations around the United States, when Arizona 22 is clearly one of many locations where venue is appropriate and where the matter may be 23 litigated. 24 25 26 27 28 In response to the inability of a district court to effect service outside of its state's borders, Congress enacted § 1355(d), which provides that a district court "with jurisdiction over a forfeiture action pursuant to subsection (b) may issue and cause to be served in any other district such process as may be required to bring before the court the property that is the subject of the forfeiture action." This national service of process provision clearly conferred in rem jurisdiction on district courts in forfeiture proceedings with respect to property located within another judicial district in the United States. See United States v. $633,021.67, 842 F.Supp 528, 531-32 (N.D. Ga 1993); United States v. Contents of Account No. 2033301, 831 F.Supp 337, 340
14 Case 2:04-cv-00363-JWS Document 95 Filed 08/09/2005 Page 14 of 16

A forfeiture action or proceeding may be brought in the district court for the district in which any of the acts or omissions giving rise to the forfeiture occurred, or ...

1 2

(S.D.N.Y 1993). Prior to the district court's decision in the instant case, however, no published opinion had applied § 1355 to property located in a foreign country.

3 Meza, supra at 152. Can there be any question that, if defendants #2 and #3 were located in 4 Florida, the criminal acts of Ross Castillo alleged in the complaint would suffice to cause in rem 5 process to be served upon the aircraft and the constructive delivery of the res made to Arizona? 6 Absolutely not! Jaime Ross Castillo, as the point person for the larger conspiracy, has had 7 sufficient contacts with the District of Arizona to provide venue for the suit, based upon the acts 8 alleged in the complaint, as addressed at least within the language of §1355(b)(1)(A). The 9 coordinated efforts in other judicial districts to launder the proceeds of the fraud do not require 10 multiple suits to be filed. 11 12 CONCLUSION For the above stated reasons plaintiff respectfully moves this Honorable Court to reconsider

13 its Order dated July 26, 2005, or in the alternative grant further relief as requested herein. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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Respectfully submitted this _____ day of August, 2005.

PAUL K. CHARLTON United States Attorney District of Arizona

REID C. PIXLER Assistant U.S. Attorney

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Leonard J McDonald, Jr Tiffany & Bosco PA Camelback Esplanade II 2525 E Camelback Rd 3rd Floor Phoenix, AZ 85016

CERTIFICATE OF SERVICE
I.I hereby certify that on August 8, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Allen B Bickart Law Office of Allen B Bickart PO Box 44005 Phoenix, AZ 85064 [email protected] Douglas F Behm Jennings Strouss & Salmon PLC Collier Ctr 201 E Washington St, Ste 1100 Phoenix, AZ 85004-2385 [email protected]

9I hereby certify that on August 9, 2005, I served the attached document by U.S. mail, who are not registered participants of the CM/ECF System:
Marc S. Nurik Ruden McClosky Smith Schuster & Russell, PA PO Box 1900 Ft Lauderdale, FL 33302 Gerald H Goldstein, Cynthia Eva Hujar Orr Goldstein Goldstein & Hilley 2900 Tower Life Bldg 310 S St Mary's St, Ste 2900 San Antonio, TX 78205

K Lawson Pedigo Miller Keffer & Pedigo 8401 N Central Expressway , Ste 630 Dallas, TX 75225 Mark A Platt Fulbright & Jaworski LLP 2200 Ross Ave , Ste 2800 Dallas, TX 75201

S/

Victoria Tiffany

16 Case 2:04-cv-00363-JWS Document 95 Filed 08/09/2005 Page 16 of 16