Free Response in Opposition to Motion - 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. Lear Jet, Model 31A, Serial Number 31A224, U.S. Registration # N224LJ; Defendants. CIV-04-363-PHX-JWS
SUPPLEMENTAL RESPONSE IN OPPOSITION TO MOTION TO STAY OF CIVIL PROCEEDINGS & QUASH

DISCOVERY

PRELIMINARY STATEMENT The plaintiff, files this Supplemental Response in Opposition to the requests filed by counsel

17 for the Abed claimants. A time line was set out in plaintiff's RESPONSE IN OPPOSITION TO 18 MOTION TO QUASH, filed separately. That time line and the relevant portion of that argument 19 are fully endorsed herein and incorporated by this reference. There are factual assertions 20 provided by counsel for claimants in the Replies which do not appear to be supported by exhibits 21 and which conflict with the recollection of counsel for plaintiff, and other witnesses. 22 Counsel for the Abed claimants affirmatively misstates the nature of the conversation held 23 on or about November 28, 2005, falsely suggesting that Mr. Lacey stated that Abed had not been 24 indicted yet. Based upon the affidavit from Mr. Lacey, it is clear that this representation by 25 counsel is materially false and misleading. Mr. Lacey states that he is unaware of evidence 26 which suggests that Mr. Abed knowingly participated in the laundering of the stolen bank funds. 27 However, that does not mean that Abed or his corporations are the owners of the funds which 28

Case 2:04-cv-00363-JWS

Document 146

Filed 12/02/2005

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1 were provided by Jaime Ross Castillo and which he admits came from the Romero accounts at 2 Inverlat Bank. See the attached Affidavit of James T. Lacey. 3 The affidavit also makes clear that Reid C. Pixler, the AUSA assigned to this forfeiture case,

4 has no authority to make any reference or assurance related to the handling of the related 5 criminal matter, as suggested by counsel in the Reply. Further, the specific document cited by 6 counsel for the Abed claimants was a return of the international service of the warrant of arrest 7 in rem, approved and issued by this Court at the very inception of the case. The existence of this 8 form in the file of the Court, particularly after the Court has dismissed the two aircraft from the 9 suit which were the object of the warrant, certainly is no basis to contradict the assertions of 10 AUSA Jim Lacey. See the attached Affidavit of Wanda Delgado. 11 Contrary to the allegations of counsel for the Abed claimants, the Phoenix Meeting on or

12 about October 27, 2004, was not a settlement negotiation. Representations to the contrary by 13 counsel are false. As proof of the fact that an interview was conducted a summary of the 14 information provided by or through Abed is included in the Delgado Affidavit. Counsel for the 15 Abed claimants and Abed himself expressed the desire to disgorge all funds provided by Jaime 16 Ross Castillo and volunteered to provide evidence to demonstrate how much of the funds used 17 to acquire all of the aircraft came from legitimate sources and how much came from Abed. 18 Settlement negotiations would not have involved the interview process which was clearly 19 utilized to obtain this information. 20 At the conclusion of the meeting both parties agreed to exchange discovery without resorting

21 to formal process. To date, plaintiff has complied with this agreement by providing informal 22 discovery, and the Abed claimants have provided nothing other than what has already been 23 obtained. Rather than cooperate in a search for the truth, counsel for the Abed claimants has 24 interposed delay, going so far as to complain about the expedited track process employed by this 25 Court. Claimants are free to move for a change in the track assignment, but they are not free to 26 simply ignore the designation made by the Court. Despite the opportunity to ask for a more 27 formal process, claimants have done nothing but impose delay and refuse to comply with the 28 reasonable discovery requests presented by plaintiff. Further, Rule 26 requires actions by all
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1 parties. No party has challenged the expedited track designation nor has any party requested a 2 meeting for the purposes of Rule 26. Rather all parties have accepted the provisions of the 3 Scheduling Order entered by this Court. After the service of the discovery it is a bit late to 4 complain. 5 In short, there has been virtually no production of any discovery by the Abed claimants

6 which had not already been obtained by plaintiff. Despite assurances to the contrary, counsel 7 for Abed have never shown sources for the funds used to acquire the aircraft or have 8 demonstrated in any way or manner that the funds did not come from Romero through the 9 activities of Jaime Ross Castillo. Stated another way, plaintiff is seeking to compel claimants 10 to prove the truth of the allegations contained in their answer that the funds came from 11 somewhere other than through Jaime Ross Castillo. By its very nature, such evidence, if 12 produced and if it established the truth of the allegations in the Answer, it could not tend to 13 incriminate. 14 If claimants cannot produce such evidence, then that inability does not necessarily

15 incriminate anyone. Rather, it only proves claimants lied or overstated their evidence in the 16 answer and are attempting to gain a windfall from the possession of the funds stolen from the 17 bank by Jaime Ross Castillo. These records concerning the source of the funds cannot establish 18 knowledge that the funds were proceeds of the "specified unlawful activity" of international 19 bank fraud, required for the prosecution of a criminal case for money laundering pursuant to 18 20 U.S.C. §1956 or 1957. However, the lack of knowledge does not translate into ownership of the 21 funds. That is, the fact that claimants are ignorant of the source of the funds and the criminal 22 acts involved in obtaining the funds does not mean that the stolen funds are the property of 23 claimants. They have obtained no title to these funds and must surrender the funds to the rightful 24 owners. 25 26 27 ARGUMENT 1. Claimants have no Self Incrimination privilege because they are corporations. The discovery sought by plaintiff is appropriate and is specifically tailored to the allegations

28 of the complaint. Essentially, the discovery centers on corporate financial records associated
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1 with the movement of money through the corporate accounts and to the purchase of the three 2 aircraft. Claimants have denied the allegations contained in the complaint, but to date have 3 failed to provide any evidence to support the Abed version of the facts. The discovery requested 4 is not burdensome and is very similar to the discovery routinely utilized by plaintiff in the 5 litigation of forfeiture actions in the District of Arizona. It is designed and intended to get to the 6 truth of the matters involved in this case, and not focused upon the generating information for 7 a criminal case. 8 Counsel for claimants fail to comprehend that, as foreign corporations, that is businesses

9 conducted in a corporate form, and the corporate officers, directors, and agents, there is no Fifth 10 Amendment privilege regarding such financial records and related evidence. 11 12 13 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.

14 Braswell v. United States, 487 U.S. 99, 102, 108 S.Ct. 2284, 2287 (1988). 15 Counsel for the Abed claimants asserts that this case and similar holdings have been

16 rendered meaningless by the provisions of the Civil Asset Forfeiture Reform Act (CAFRA), 17 specifically the provisions for a stay found in 18 U.S.C. §981(g)(2). Counsel for the Abed 18 claimants disingenuously suggests that plaintiff seeks the judicial repeal of CAFRA. This 19 argument is patently silly. 20 CAFRA creates no constitutional rights at all, and could never do so, merely because it is

21 a statute. The history of the case law in the United States has consistently held that corporations 22 have no Fifth Amendment rights, and such rights do not extend to financial records of such 23 corporations. Plaintiff merely points out that the CAFRA provision cited by counsel for the 24 Abed claimants does not provide for the relief requested. That is, because the corporate 25 claimants have no Fifth Amendment right, the discovery sought in this civil forfeiture case 26 cannot, "... burden the right of the claimant against self-incriminaltion." Furthermore, there is 27 no competent evidence submitted by counsel for Abed that compliance with the discovery will 28
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1 impair the rights of any party. Nothing but rank speculation and misstatements have been 2 presented by counsel for the Abed claimants. See Affidavit of James Lacey. 3 Plaintiff affirmatively asserts that the discovery is intended to require claimants to produce

4 evidence that the funds it claims have a source other than those funds controlled by Jaime Ross 5 Castillo, which counsel for claimants has repeatedly indicated it would produce. Such evidence 6 of a legitimate source would support the position taken by claimants that the defendant aircraft 7 is their property. Such evidence could not be seen as tending to convict claimants. However, 8 even if the purpose was to obtain evidence for use in a criminal case, the corporations may not 9 seek a stay because they may not assert a fifth amendment privilege. Plaintiff seeks the specific 10 enforcement of the CAFRA provisions cited by counsel. Based upon that statute a stay is not 11 appropriate and there is no basis to quash the discovery. 12 13 14 2. 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)

Similarly, the provisions of CAFRA prohibit one party from engaging in discovery while

15 seeking to prevent the collection of discovery pursuant to proper process. It is manifestly unfair 16 to suggest that plaintiff be prevented from collecting reasonable discovery from claimants, while 17 the Abed claimants have exploited an agreement to produce documentary evidence. The Abed 18 claimants have collected such discovery and now refusing to produce any material and relevant 19 evidence. The effect is to allow claimants to obtain discovery and prevent plaintiff from 20 obtaining any discovery, even if that discovery is directed to proving the truth of allegations 21 contained in the Answer filed by all three claimants. 22 In short, seeking a stay for improper reasons cannot be a substitute for appearing at a

23 deposition or answering questions regarding specific allegations contained in an Answer 24 submitted to create standing and in an effort to obtain property. There is absolutely no showing 25 that this evidence, if it is as alleged in the Answer, will contribute to anything other than the 26 return of the defendant Lear Jet. If, however, counsel and claimants cannot produce proof to 27 support their factual allegations as they appear in the Answer, then they very well may be subject 28 to sanctions by this Court and summary judgment in favor of plaintiff. However, that prospect
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1 does not warrant a stay. The Abed Claimants cannot simply allege that all discovery may 2 convict them, but must address such allegations in each situation and with a substantial degree 3 of specificity. No such showing has been made with regard to the standards set out in 18 U.S.C. 4 §981 (g)(2). 5 6 SUMMARY Claimants have failed to provide any basis other than mere speculation to support the request

7 for a Stay. Based upon the affidavits of Lacey and Delgado, there is no basis which will support 8 a stay. Because the records sought to be produced are corporate records involved in the 9 movement of funds to acquire the defendant aircraft, there is no Fifth Amendment privilege 10 available to claimants, and therefore no basis to stay this action. Claimants have taken advantage 11 of a liberal discovery policy and reciprocal promises of production by receiving substantial 12 discovery from plaintiff, but have refused to produce any current, relevant, or material evidence. 13 This motion is imposed only a few days before the discovery is due and is imposed in bad faith 14 to prevent, delay, or avoid the discovery requirements and claimants duty to engage in discovery. 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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Respectfully submitted this 2nd day of December, 2005.

PAUL K. CHARLTON United States Attorney District of Arizona S/ Reid C. Pixler REID C. PIXLER Assistant U.S. Attorney

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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 December 2, 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 December 2, 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

S/ Victoria Tiffany Victoria Tiffany

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