Free Order on Motion for Reconsideration - District Court of Arizona - Arizona

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

) ) Plaintiff, ) ) vs. ) ) LEAR JET, Model 31A, Serial Number ) 31A-224, U.S. Registration Number ) N224LJ, ) ) Defendant. ) )

UNITED STATES OF AMERICA,

2:04-cv-00363 PHX JWS ORDER FROM CHAMBERS [Re: Motions at Dockets 153, 156, 159, 161, and 171]

I. MOTIONS PRESENTED At docket 153, claimant Alberto Abed-Schekaiban ("Abed") moves for reconsideration of the court's order at docket 152. At docket 155, the United States of America ("USA") opposes Abed's motion at docket 153. At docket 156, Abed moves for leave to file additional documents in support of his motion at docket 153. At docket 157, the USA opposes Abed's motion at docket 156. At docket 159, Abed moves for leave to file even more documents in support of his motion at docket 153. At docket 160, the USA opposes Abed's motion at docket 159. At docket 161, Abed moves for leave to file documents relating to concerns raised by the USA about the authenticity of some of the papers Abed submitted at docket 156. The motion at docket 161 has not been

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opposed. At docket 171, Abed moves to withdraw the motion at docket 156. Oral argument has not been requested on any of the motions and would not assist the court. II. DISCUSSION A. Motion for Reconsideration at Docket 153 Abed moves the court to reconsider its order at docket 152, in which the court denied his motion to stay these proceedings and, accordingly, denied his motions to quash the USA's deposition notice and for a protective order against the USA's interrogatories and requests for admissions. Because the court's decision on the discovery motions followed its resolution of the motion to stay, the court first will address its decision on the motion to stay. That motion was based on 18 U.S.C. § 981(g)(2), which provides "[u]pon the motion of a claimant, the court shall stay the civil forfeiture proceeding with respect to that claimant if the court determines that ­ (A) the claimant is the subject of a related criminal investigation or case; (B) the claimant has standing to assert a claim in the civil forfeiture proceeding; and (C) continuation of the forfeiture proceeding will burden the right of the claimant against self-incrimination in the related investigation or case." Abed's standing to assert a claim in these proceedings is not questioned. Thus, the propriety of a stay depends on whether Abed is the subject of a related criminal investigation or case and whether continuing these proceedings will burden his right against self-incrimination in that investigation or case. An affidavit submitted by the USA at docket 146 shows Abed is the subject of a related criminal investigation. In that affidavit, James T. Lacey, Assistant United States Attorney for the District of Arizona, declares he is "conducting a criminal investigation of -2-

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... persons who were involved in defrauding Mexican banks of millions of dollars and thereafter using the illegal proceeds to purchase [defendant Lear Jet, which is] titled or registered in the name of corporations owned or controlled by [Abed]."1 He cautions "the United States has not indicted [Abed]," but he says the investigation is continuing and implies it will last until he is convinced Abed did not know about the allegedly illegal source of the funds allegedly used to purchase defendant Lear Jet.2 Lacey's statements show Abed is under a criminal investigation, that the investigation involves the same subject matter as the government's case against defendant Lear Jet, and therefore, that the investigation is related to these proceedings. As for whether continuing these proceedings would burden Abed's right against self-incrimination, the court held at docket 152 that they would not. That holding's basis was the court's conclusion that the Fifth Amendment, which provides the right against self-incrimination, presently does not apply to Abed because there are indications he is a non-resident alien outside United States territory. The court now believes the Fifth Amendment's present applicability to Abed is not the relevant issue under Subsection 981(g)(2). The Fifth Amendment's right against self-incrimination is a "fundamental trial right of criminal defendants,"3 and so the first question must be whether Abed, assuming he is a non-resident alien outside United States' territory, may invoke the right against self-incrimination at any future criminal trial in the United States.

1

Doc. 146, affidavit of James T. Lacey, p. 1, ¶ 1. Id., pp. 1-2, ¶¶ 3-5.

2

United States v. Verdugo-Urquidez, 494 U.S. 259, 264 (1990) (citing Malloy v. Hogan, 378 U.S. 1 (1964)) (emphasis added).

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If he may, then the next question is whether these proceedings will "burden" that right. Apparently, only one court has squarely addressed the first question. In United States v. Bin Laden, the United States District Court for the Southern District of New York held two of the non-resident alien criminal defendants in that case could invoke the right against self-incrimination at trial.4 This court agrees with the Bin Laden court's analysis and holding. Accordingly, the court concludes Abed may invoke the right against self-incrimination at a criminal trial in a United States court. Before addressing whether these proceedings will "burden" that right, the court must consider how they might do that. When it enacted Subsection 981(g)(2), Congress did not define the word "burden" or otherwise explain how civil forfeiture proceedings might "burden the right against self-incrimination." Fortunately, case law sheds some light on that phrase's meaning. The phrase was coined to describe the alleged effect on individuals' right against self-incrimination when civil proceedings put them in the position of having to decide whether to speak at the risk of incriminating themselves or to remain silent at the risk of losing the proceedings.5 That was exactly the situation in which some claimants in civil forfeiture proceedings found themselves before Congress enacted Subsection 981(g)(2) in 2000. For example, the claimant in United States v. Little Al was attempting to prevent his ownership interest in a fishing vessel from being forfeited while he was appealing his

4

132 F. Supp. 2d 168, 181-85 (S.D.N.Y. 2001).

See, e.g., Asherman v. Meachum, 957 F.2d 978, 982 (2d Cir. 1992) (using "impair" and not "burden"); Gniotek v. City of Philadelphia, 808 F.2d 241, 245 (3d Cir. 1986); In re Corrugated Container Antitrust Litig., 655 F.2d 748, 752 (7th Cir. 1981) (citing Patrick v. United States, 524 F.2d 1109, 1120 (7th Cir. 1975)).

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conviction in a criminal case arising from the seizure of the vessel.6 He moved for a continuance of the forfeiture proceedings, arguing the burden on him to offer affidavits rebutting the government's showing that the vessel was subject to forfeiture "substantially prejudice[d]" his criminal appeal.7 The district court denied his motion and the Fifth Circuit affirmed on the ground the denial was not an abuse of discretion.8 The circuit court characterized the claimant's argument as a "blanket assertion" of his right against self-incrimination, noting he had not explained how producing affidavits would prejudice his criminal appeal.9 While recognizing "the pendency of the criminal action `forced [the claimant] to choose between preserving his privilege against selfincrimination and losing the civil suit,'" the court also observed "the very fact of a parallel criminal proceeding, however, did not alone undercut [his] privilege against selfincrimination."10 At first glance, the Little Al decision indicates the Fifth Circuit might take a dim view toward the idea that Abed's predicament entitles him to a stay, but for two reasons, the decision is not as rigid as it seems. First, the Little Al court's concern that the claimant had not explained how the civil forfeiture proceeding would prejudice him in the related criminal case does not apply here. Abed has shown how responding to the USA's discovery requests could hurt him in the related criminal investigation. Some of
6

712 F.2d 133, 134 (5th Cir. 1983). Id. at 135. Id. at 135-36. Id. at 136. Id. (quoting Hoover v. Knight, 678 F.2d 578, 581 (5th Cir. 1982)) (emphasis added).

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those requests inquire about the sources and amount of Abed's income and the source of the money used to buy defendant Lear Jet, in which Abed and companies associated with him claim ownership interests. According to the USA, that information would not incriminate Abed because it does not show he knew about the purchase money's allegedly illegal source. Abed's knowledge about the source's alleged illegality may be one element of a crime, but it is highly likely other information relevant to proving the crime includes the money's source and that is the kind of information the USA seeks here. Because Abed has shown the information he would have to produce if these proceedings are not stayed could be used against him in the related criminal case, he is not relying solely on the existence of that case, as was the claimant in Little Al, to justify a stay.11 The second reason why Little Al is inapplicable is it focuses on a principle not at issue in this case. For the proposition that it is permissible to "force[ a claimant] to choose between preserving his privilege against self-incrimination and losing the civil suit," the Little Al court cited another Fifth Circuit decision, Hoover v. Knight, which held that to do so does not violate the claimant's constitutional rights.12 The question here is

The USA also suggests the information it seeks simply would confirm the truth of Abed's answer to the government's complaint and argues his answer, if true, would exculpate him. That argument is unavailing because it compares the sought-after information to the allegations in Abed's answer, while Subsection 981(g)(2) compares the information to the related criminal investigation. Subsection 981(g)(2)'s concern is not whether the information is consistent with Abed's answer, but whether it could incriminate him. Abed and his counsel may be subject to sanctions under Federal Rule of Civil Procedure 11(c) if his answer turns out to be rank prevarication, but that issue is not relevant to whether the court must stay these proceedings.
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678 F.2d at 580, 582.

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not whether proceeding with the forfeiture action would violate Abed's constitutional rights, but whether it would violate his rights under Subsection 981(g)(2). Although not a civil forfeiture case, one case that is more obviously amicable to people in Abed's situation is the Ninth Circuit's decision in London v. Patterson.13 The London court suggested a way out of the position Abed finds himself in. After describing the predicament ­ speaking at the risk of incrimination or remaining silent at the risk of losing a civil suit ­ the court proposed the solution of "a protective order ... postponing civil discovery until termination of the criminal action."14 After considering Little Al, Hoover, and London, the court is convinced these proceedings "burden" Abed's right against self-incrimination, as that word is used in Subsection 981(g)(2). It is clear from the case law that Abed does not face a conundrum of constitutional magnitude, but both the Little Al and London courts recognized individuals who show how civil proceedings might prejudice them in a criminal case may be entitled to a stay of the civil proceedings. In light of that case law, Subsection 981(g)(2) should be read as acknowledging the same dilemma and resolving it by making a stay mandatory instead of discretionary. Because Abed faces that dilemma, the court must stay these proceedings. Accordingly, discovery directed at him may not proceed, and his motions to quash and for a protective order must be granted. B. Motions at Dockets 156, 159, 161, and 171

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463 F.2d 95 (9th Cir. 1972). Id. at 98.

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The motions at dockets 156, 159, 161, and 171 concern additional documents Abed seeks to submit in support of his argument that a stay is warranted. It is not necessary to consider those documents because the documents the parties already have submitted form a sufficient basis on which to decide whether a stay is warranted. Consequently, the motions at dockets 156, 159, 161, and 171 will be denied as moot. III. CONCLUSION For the reasons set out above: 1) the motion at docket 153 is GRANTED; 2) the court's order at docket 152 is VACATED to the extent it a) denied a stay of these proceedings with respect to Abed and b) denied the motions at dockets 136 and 137; 3) the motion to stay at docket 132 is GRANTED with respect to Abed; 4) the motions to quash and for a protective order at dockets 136 and 137 are GRANTED; and 5) the motions at dockets 156, 159, 161, and 171 are DENIED as moot. This case is STAYED with respect to Abed until Monday, August 21, 2006. On that date, the court directs the USA and Abed to file separate status reports discussing whether the court should continue or lift the stay. If the court does not hear from the parties on that date, it will lift the stay immediately. Either party may file a motion to lift the stay before that date should circumstances warrant lifting the stay ­ for instance, if the USA grants Abed immunity from criminal prosecution related to the subject matter of these proceedings.

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This order does not affect the interlocutory sale of defendant Lear Jet,15 which is set for June 23, 2006, or the court's denial of a stay with respect to claimants Calezar, Ltd., and Uptongrove, Ltd. DATED at Anchorage, Alaska, this 1st day of June 2006.

/s/ JOHN W. SEDWICK UNITED STATES DISTRICT COURT JUDGE

15

18 U.S.C. § 981(g)(6); Order at docket 106.

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