Free Response in Opposition to Motion - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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. Lear Jet, Model 31A, Serial Number 31A224, U.S. Registration # N224LJ; Defendants. CIV-04-363-PHX-JWS
RESPONSE IN OPPOSITION TO MOTION TO RECONSIDER

PRELIMINARY STATEMENT Pursuant to the Order of the Court, plaintiff files this Response in Opposition to the Motion

17 to Reconsider filed by counsel for the Abed claimants. A time line was set out in plaintiff's 18 response in opposition to motion to quash (doc 140). That time line and the relevant portion of 19 the argument are fully endorsed herein and incorporated by this reference. Plaintiff also fully 20 endorses the factual assertions and presentations made in the previous response in opposition to 21 the stay motion and quash (doc 141). The factual assertions provided by counsel for claimants 22 did not appear to be supported by exhibits and which conflict with the recollection of counsel 23 for plaintiff. From the Order of the Court dated January 23, 2006, it is apparent the Court relied 24 upon the factual assertions made by plaintiff. The Abed claimants have not contested these 25 factual determinations but now ask the Court to reconsider only one aspect of the ruling, whether 26 Abed has a personal Fifth Amendment privilege which cannot be addressed other than by staying 27 the entire forfeiture proceeding. 28

Case 2:04-cv-00363-JWS

Document 155

Filed 02/22/2006

Page 1 of 11

1

Plaintiff understands all efforts to assert a Fifth Amendment privilege have been abandoned

2 by the corporate business entities listed as Abed claimants. Further, plaintiff understands that 3 Abed is no longer disputing the fact he has no Fifth Amendment privilege in the financial 4 records and communications of those same corporate entities. Foreign corporations, that is 5 businesses conducted in a corporate form, and the corporate officers, directors, and agents, have 6 no Fifth Amendment privilege regarding such financial records and related evidence. 7 8 9 There is no question but that the contents of the subpoenaed business records are not privileged. See Doe, supra; Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976). Similarly, petitioner asserts no self-incrimination claim on behalf of the corporations; it is well established that such artificial entities are not protected by the Fifth Amendment. Bellis, supra.

10 Braswell v. United States, 487 U.S. 99, 102, 108 S.Ct. 2284, 2287 (1988). 11 Abed has asserted in the Statement of Interest dated May 27, 2004 (doc 16), that his interest

12 in the defendant aircraft is limited to the beneficial ownership of Calezar, Ltd., and his service 13 as an agent for the other claimants. In other words, Abed holds no title to the defendant aircraft, 14 and his interest is in the businesses entities which were used to purchase the defendant aircraft. 15 The complaint in this action alleges theft of money from Inverlat Bank by Jaime Ross

16 Castillo and his co-conspirators. That money was laundered through a number of bank accounts 17 and has been traced into financial transactions described in the amended complaint. Counsel for 18 Abed admit that they have engaged in conversation with James Lacy, the AUSA in charge of that 19 investigation, as noted in their motion: 20 21 22 23 Claimants' memo at page 2, line 23 to page 3, line 1 (doc 138). It is therefore uncontested that 24 no criminal investigation is pending which implicates Abed. The government has traced 25 proceeds from the Ross theft into at least a portion of the purchase price of the aircraft. Abed 26 has offered to refund any such money found to be used to purchase the aircraft, but has refused 27 to produce any evidence regarding the source of any of the funds which he allegedly provided 28 to purchase the defendant aircraft.
2 Case 2:04-cv-00363-JWS Document 155 Filed 02/22/2006 Page 2 of 11

This Assistant United States Attorney, James Lacy, then advised the Claimant in 2002 that Alberto Abed and Uptongrove, Ltd., were not subjects of his investigation, having been cleared of wrongdoing. However, he also advised counsel that Uptongrove, Ltd., was not entirely in the clear.

1

Contrary to the allegations of counsel for Abed, there has been virtually no production

2 of any discovery which had not already been obtained by plaintiff. Despite assurances to the 3 contrary, counsel for Abed have never shown sources for the funds used to acquire the aircraft 4 or have demonstrated in any way or manner that the funds did not come from Romero through 5 the activities of Jaime Ross Castillo. Stated another way, plaintiff is seeking to compel claimants 6 to prove the truth of the allegations contained in their answer, that the funds came from 7 somewhere other than through Jaime Ross Castillo. By its very nature, such evidence, if 8 produced and if it established the truth of the allegations in the Answer, could not tend to 9 incriminate. 10 If claimants cannot produce such evidence, then that inability does not necessarily

11 incriminate anyone. Rather, it only proves claimants lied or overstated their evidence in the 12 answer and are attempting to gain a windfall from the possession of the funds stolen from the 13 bank by Jaime Ross Castillo. These records concerning the source of the funds cannot establish 14 knowledge that the funds were proceeds of the "specified unlawful activity" of international 15 bank fraud, required for the prosecution of a criminal case for money laundering pursuant to 18 16 U.S.C. §1956 or 1957. However, the lack of knowledge does not translate into ownership of the 17 funds. That is, the fact that claimants are ignorant of the source of the funds and the criminal 18 acts involved in obtaining the funds does not mean that the stolen funds are the property of 19 claimants. They have obtained no title to these funds and must surrender the funds to the rightful 20 owners. Abed has failed to provide any basis to believe that the production of the evidence 21 requested by plaintiff through discovery will in any way incriminate him. Rather, all that he has 22 done is make naked allegations lacking any legal support. The Motion to Reconsider (doc 153) 23 is no exception. Despite the previous briefing, Abed makes no attempt to provide this Court 24 with any basis to evaluate his claim of privilege nor to address the fact that the imposition of a 25 stay would work to his sole benefit because he has already collected discovery from plaintiff and 26 now seeks to prevent discovery from him upon a blanket assertion of a privilege. 27 28
3 Case 2:04-cv-00363-JWS Document 155 Filed 02/22/2006 Page 3 of 11

1 2 3 4 1.

ARGUMENT Do aliens, regardless of location or connection with the United States, possess a Fifth Amendmnet protection against self incrimination?

Plaintiff did not argue this issue. Rather, the analysis provided by plaintiff was that Abed

5 had no such right because the claimants with title and control of both the defendant aircraft and 6 the money used to acquire the aircraft had no self incrimination privilege. Due to the form of 7 business utilized by Abed, he can claim no privilege regarding these corporate financial records 8 and communications. Reliance upon this uncontested argument would forestall the need to 9 determine whether, and under what circumstances, an alien might have such a right. 10 At footnote 3 of the Order of January 23, 2006, the Court cited one case for the proposition

11 that Abed may have no Fifth Amendment right because he appeared to be, "... an alien outside 12 United States territory." The citation was to Zadvydas v. Davis, 533 U.S. 678, 693 (2001) (citing 13 United States v. Verdugo-Urquidez, 494 U.S. 259, 269 (1990); Johnson v. Eisentrager, 339 14 U.S. 763 (1950)). The citation is to the following passage: 15 16 17 18 19 20 Zadvydas v. Davis, supra at 693. Counsel for Abed is incorrect in the summary of the holding of Zadvydas. The aliens It is well established that certain constitutional protections available to persons inside the United States are unavailable to aliens outside of our geographic borders. See United States v. Verdugo-Urquidez, 494 U.S. 259, 269, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990) (Fifth Amendment's protections do not extend to aliens outside the territorial boundaries); Johnson v. Eisentrager, 339 U.S. 763, 784, 70 S.Ct. 936, 94 L.Ed. 1255 (1950) (same).

21 involved were resident aliens who had been convicted of serious crimes and ordered deported 22 after they served their sentences. Zadvydas had lived in the U.S. since 1956 when he was 8 23 years old, and Kim Ho Ma had lived in the U.S. since 1984 when he as 7. Zadvydas at 684-85. 24 The problem was no other country would agree to take them. The Supreme Court most 25 assuredly did not treat them as if they were stopped at the border. Rather that language referred 26 to the logic used to distinguish the holding of Shaughnessy v. United States ex rel Mezei, 345 27 U.S. 206, 73 S.Ct. 625, 97 L.Ed 956 (1953), where the alien had lived for some time in the U.S.; 28 left for an extended period of time; then attempted to return. That alien was treated as if he were
4 Case 2:04-cv-00363-JWS Document 155 Filed 02/22/2006 Page 4 of 11

1 stopped at the border and could not leave Ellis Island. Essentially, the only aspect of the 2 Zadvydas case was the reference to the "well established" case law which it referenced. 3 Both the Supreme Court and this Court cited the reader to United States v. Verdugo-

4 Urquidez, 494 U.S. 259, 269 (1990). This case involved an effort to suppress the fruit of a 5 warrantless search in Mexico by a drug trafficking defendant in the United States. Again the 6 citation is to a specific passage: 7 8 9 10 11 12 13 14 15 16 17 18 Id. at 269. In the face of this clear expression of Supreme Court limitation upon the availability of the Such extraterritorial application of organic law would have been so significant an innovation in the practice of governments that, if intended or apprehended, it could scarcely have failed to excite contemporary comment. Not one word can be cited. No decision of this Court supports such a view. Cf. Downes v. Bidwell, 182 U.S. 244 [21 S.Ct. 770, 45 L.Ed. 1088 (1901)]. None of the learned commentators on our Constitution has even hinted at it. The practice of every modern government is opposed to it." Id., at 784, 70 S.Ct., at 947. Indeed, we have rejected the claim that aliens are entitled to Fifth Amendment rights outside the sovereign territory of the United States. In Johnson v. Eisentrager, 339 U.S. 763, 784, 70 S.Ct. 936, 94 L.Ed. 1255 (1950), the Court held that enemy aliens arrested in China and imprisoned in Germany after World War II could not obtain writs of habeas corpus in our federal courts on the ground that their convictions for war crimes had violated the Fifth Amendment and other constitutional provisions. The Eisentrager opinion acknolwedged that in some cases constitutional provisions extend beyond the citizenry; "the alien ... has been accorded a generous and ascending scale of right as he increases his identity with our society." Id. At 770, 70 S.Ct., at 940. But our rejection of extraterritorial application of the Fifth Amendment was emphatic:

19 Fifth Amendment privilege Abed tenders a District Court opinion from the Southern District of 20 New York which considered the sufficiency of a Miranda Advisement to a target of an 21 investigation effectively in U.S. custody and control in a foreign country. The investigation 22 related to the bombing of a U.S. Embassy by a terrorist organization. As admitted by counsel 23 for Abed, the District Court in United States v. Bin Laden, found that the Fifth Amendment 24 violation did not occur at the time of the custodial interrogation, but at a later point in time when 25 the defendant has been brought into the United States to stand trial for the crimes with which he 26 has been charged. 27 28 Whether or not Fifth Amendment rights reach out to protect individuals while they are situated outside the United States is beside the point. This is because any violation of the privilege against self-incrimination occurs, not at the moment law enforcement
5 Case 2:04-cv-00363-JWS Document 155 Filed 02/22/2006 Page 5 of 11

1 2 3 4 5 6 7 8 9 10 11 12

officials coerce statements through custodial interrogation, but when a defendant's involuntary statements are actually used against him at an American criminal proceeding. See United States v. Verdugo-Urquidez, 494 U.S. 259, 264, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990) ("Although conduct by law enforcement officials prior to trial may ultimately impair [the privilege against self-incriminaltion], a constitutional violation occurs only at trial.") (citing Kastigar v. United States, 406 U.S. 441, 453, 92 S.Ct. 1653, nd L.Ed 2d 212 (1972)); Deshawn E. By Charlotte E. V. Safir, 156 F.3d 32 340, 346 (2 Cir. 1998) ("Even if it can be shown that a statement was obtained by coercion, there can be no Fifth Amendment violation until that statement is introduced against the defendant in a criminal proceeding.") Indeed, were the opposite the case ­ that is, if instead the Fifth Amendment injury resulted from the forcibile extraction of a statement and not is later evidentiary use ­ then no statute compelling witness testimony under grants of immunity could withstand constitutional challenge. (See Mahoney v. Kesery, 976 F.2d 1054, 1061-62 (7th Cir. 1992); see also Kastigar, 406 U.S. at 453, 92 S.Ct. 1653 (upholding federal witness immunity statute on grounds that, by barring prosecutor from use and derivative use of witness's compelled testimony, statute satisfies "sole concern" of privilege against self incrimination, i.e., "insur[ing] that the testimony cannot lead to the infliction of criminal penalties on the witness.) The violation of Defendants' rights here, if any, is clearly prospective, and so the relevant question is the scope of the privilege against self-incrimination as to nonresident aliens presently inside the United States and subject to domestic criminal proceedings. United States v. Bin Laden, 132 F. Supp 2d 168, 181-82 (S.D.N.Y.)

13 For the purposes of determining whether discovery may be had, including the deposition of 14 Abed, the holding could not be more clear. Collecting discovery from Abed, who will have 15 representation, cannot be a violation of any right available to a non-resident alien unless and 16 until the evidence collected is offered against him in a criminal court in the United States. 17 Regardless of whether Abed is the target of a criminal investigation in the United States, there 18 can be no violation of the Fifth Amendment until coerced statements or documents in this civil 19 forfeiture action are offered in a criminal proceeding. This civil forfeiture action is not a 20 criminal proceeding. 21 Abed next relies upon two criminal cases 22 allegations, for the proposition that, "These statutes provide for the forfeiture of property based 23 upon the property owner's guilt of a criminal offense." Of course the statutes which were 24 involved in the cited cases were in fact are criminal forfeiture statutes, which are a portion of the 25 sentencing phase of the criminal proceeding. See 21 U.S.C. §853 and 18 U.S.C. §982. In fact, 26 27 United States v. Zucher, 161 U.S. 475, 479, 16 S.Ct. 641, 40 L.Ed 777 (1896); U.S. 28 v. Ursery, 518 U.S. 267, 303, 116 S.Ct. 2135, 2154, 135 L.Ed. 2d 540. (1996).
6 Case 2:04-cv-00363-JWS Document 155 Filed 02/22/2006 Page 6 of 11
1/

1/

which also included criminal forfeiture

1 these statutes are related to the guilt of a defendant and are a portion of the criminal matter. 2 Contrast these statues with those which seek a civil remedy unrelated to the guilt or innocence 3 of a criminal defendant, such as 21 U.S.C. §881 and 18 U.S.C. §981. Notice that civil forfeiture 4 actions are directed to things, not people. Notice that the complaint alleges that the funds used 5 to acquire the defendant aircraft have been traced to a theft or fraud practiced upon a bank in 6 Mexico, by Jaime Ross. There are no charges of a criminal nature in this action. Rather simple 7 tracing of financial transactions which lead to the seizure of the defendant Lear Jet. Plaintiff 8 seeks to require Abed and the other claimants to produce evidence to prove the allegations made 9 in the complaint filed on their behalf to establish an alternative source for the funds. Abed many 10 not innocently own funds stolen from the bank. He need not state anything prior to the filing of 11 the complaint. However, after participating in this litigation; collecting discovery; filing an 12 answer and motions, it is more than disingenuous to allege that plaintiff is seeking, "... to compel 13 Abed to make statements that are incriminating." Motion at line 7, page 4. 14 No matter how counsel stretches and turns, a civil forfeiture action is not the same form of

15 action as a criminal case which also involves a forfeiture allegation. Abed's objection is 16 groundless and the motion should be denied. 17 18 2. Has Abed established sufficient contacts with the U.S. ?

As noted above, the point is irrelevant, even in the cases cited by counsel. Abed

19 misconstrues the holding of Johnson v. Eisentrager, 339 U.S. 763 (1950), as well as all of the 20 other cases. Contact has less to do with the right than the use of the information obtained. The 21 focus on alien cases has been their intention regarding continued life in the U.S. or pursuing 22 citizenship. The sliding scale refered to by Abed is tied to residence and the process of 23 citizenship. 24 25 26 27 28 And in the Japanese Immigrant Case, the Court held its processes available to `an alien who has entered the country, and has become subject in all respects to its jurisdiction,
7 Filed 02/22/2006

The alien, to whom the United States has been traditionally hospitable, has been accorded a generous and ascending scale of rights as he increases his identity with our society. Mere lawful presence in the country creates an implied assurance of safe conduct and gives him certain rights; they become more extensive and secure when he makes preliminary declaration of intention to become a citizen, and they expand to those of full citizenship upon naturalization....

Case 2:04-cv-00363-JWS

Document 155

Page 7 of 11

1 2

and a part of its population, although alleged to be illegally here. 189 U.S. 86, 101, 23 S.Ct. 611, 614 47 L.Ed. 721. Id. At 770-71.

3 Abed has never expressed any intention of living in the United States nor becoming a U.S. 4 citizen, as considered by the Eisentrager court. There is no evidence in the record that he owns 5 a condominium in the U.S. If the ownership of the condo is similar to the ownership of the 6 defendant aircraft, title will not be in his name, but the name of one of his many companies. But 7 the existence of property rights or a visa are not dispositive of the issue regarding whether this 8 forfeiture action should continue. Abed has utterly failed to demonstrate in any respect that the 9 discovery sought would tend to incriminate him or that as a Mexican citizen who is not living 10 in the United States he has any right to refuse to participate in the discovery process in a civil 11 forfeiture action which he voluntarily chose to join. Abed has elected to begin the discovery 12 process by making demands upon plaintiff, and seeks now to use the mere allegation of the 13 potential of self incrimination as a shield to prevent reciprocal discovery from being conducted. 14 This abuse should not be tolerated. 15 3. 16 17 It is manifestly unfair to suggest that plaintiff be prevented from collecting reasonable 18 discovery from claimants, while they have exploited an agreement to produce documentary 19 evidence while refusing to produce any material and relevant evidence. The effect is to allow 20 claimants to obtain discovery and prevent plaintiff from obtaining any discovery, even if that 21 discovery is directed to proving the truth of allegations contained in the Answer filed by all three 22 claimants. Abed has never addressed his unfair action with respect to discovery. On balance, 23 his actions have been unfair and should not be tolerated. Plaintiff urges the Court to find that 24 this point has been conceded by Abed. 25 26 4. 27 The impact of an award of a stay for the reasons asserted by claimants would effectively be 28 an assertion of the Fifth Amendment privilege to all discovery requests. Such a blanket assertion
Case 2:04-cv-00363-JWS Document 155 8 Filed 02/22/2006 Page 8 of 11

May Claimants seek a stay to take advantage of the voluntary production of evidence by plaintiff while refusing to produce any relevant discovery materials in violation of the provisions of 18 U.S.C 981(g)(3)?

May Claimants assert a blanket Fifth Amendment privilege?

1 is universally rejected. North River Ins. Co., Inc. V. Stefanou, 831 F.2d 484, 487 (4th Cir. 2 1987), cert. denied, 486 U.S. 1007 (1988); Roach v. National Transportation Safety Board, 804 3 F.2d 1147, 1151-1152 (10th Cir. 1986), cert. denied, 486 U.S. 1006 (1988). This rule has been 4 applied in forfeiture cases as well. United States v. Little Al, 712 F.2d 133 (5th Cir. 1983). If 5 a witness seeks to assert the privilege he must claim it. Garner v. United States, 424 U.S. 648, 6 96 S.Ct. 1178, 47 L.Ed. 2d 370 (1976). 7 In short, seeking a stay for improper reasons cannot be a substitute for appearing at a

8 deposition or answering questions regarding specific allegations contained in an Answer 9 submitted to create standing and in an effort to obtain property. There is absolutely no showing 10 that this evidence, if it is as alleged in the Answer, will contribute to anything other than the 11 return of the defendant Lear Jet. If, however, counsel and claimants cannot produce proof to 12 support their factual allegations as they appear in the Answer, then they very well may be subject 13 to sanctions by this Court and summary judgment in favor of plaintiff. However, that prospect 14 does not warrant a stay. It would be a travesty of justice if Abed were allowed to benefit from 15 funds he now knows are proceeds of the theft and fraud upon the Mexican Bank simply by 16 alleging without more that he cannot Claimants cannot simply allege that all discovery may 17 convict them, but must address such allegations in each situation and with a substantial degree 18 of specificity. Again, Abed has failed to address this issue, and plaintiff urges the Court to find 19 that this point has also been conceded. 20 21 22 SUMMARY Claimants have failed to provide any basis other than mere speculation to support the request

23 for a stay. Because the records sought to be produced are corporate records involved in the 24 movement of funds to acquire the defendant aircraft, there is no Fifth Amendment privilege 25 available to claimants, and therefore no basis to stay this action. Claimants have taken advantage 26 of a liberal discovery policy and reciprocal promises of production by receiving substantial 27 discovery from plaintiff, but refuse to produce any current, relevant, or material evidence. 28 Claimants have failed in any way to establish that proceeding with discovery will tend to
9 Filed 02/22/2006

Case 2:04-cv-00363-JWS

Document 155

Page 9 of 11

1 incriminate Abed. Further, none of the claimants, on the facts presented, have standing to assert 2 a privilege against self incrimination in this civil forfeiture matter. The motion to reconsider 3 should be denied and discovery produced. 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 PAUL K. CHARLTON United States Attorney District of Arizona S/ Reid C. Pixler REID C. PIXLER Assistant U.S. Attorney Respectfully submitted this 22nd day of February, 2006.

Case 2:04-cv-00363-JWS

Document 155

10 Filed 02/22/2006

Page 10 of 11

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 Cynthia Eva Hujar Orr Goldstein Goldstein & Hilley 2900 Tower Life Bldg 310 S St Mary's St, Ste 2900 San Antonio, TX 78205 [email protected] K Lawson Pedigo Miller Keffer & Pedigo 8401 N Central Expressway , Ste 630 Dallas, TX 75225 [email protected]

CERTIFICATE OF SERVICE
I.I hereby certify that on February 22, 2006, 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 February 22, 2006, 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

S/ Victoria Tiffany Victoria Tiffany

Case 2:04-cv-00363-JWS

Document 155

11 Filed 02/22/2006

Page 11 of 11