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,

9 Plaintiff, 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PRELIMINARY STATEMENT The plaintiff, files this Response in Opposition to the request to stay filed by counsel for the Abed claimants. A time line was set out in plaintiff's RESPONSE IN OPPOSITION TO MOTION TO QUASH, filed separately. That time line and the relevant portion of that argument are fully endorsed herein and incorporated by this reference. There are factual assertions provided by counsel for claimants which do not appear to be supported by exhibits and which conflict with the recollection of counsel for plaintiff. However, many of these factual assertions are not material to the consideration of the issue of a Stay Order, and will be dealt with summarily. Early on in this action, counsel for plaintiff sought to negotiate a substitute res bond in this action which would allow the deposit of a specific sum of money and allow, with the approval of the Court and all other parties, the release of the aircraft. Counsel for Abed agreed to the proposal, and then could not produce the required sum. Rather than simply abandon the agreement, counsel for Abed attempted to renegotiate the sum at an unacceptable level. A Defendants. v. Lear Jet, Model 31A, Serial Number 31A224, U.S. Registration # N224LJ; CIV-04-363-PHX-JWS RESPONSE IN OPPOSITION TO MOTION TO STAY OF CIVIL PROCEEDINGS EXPEDITED ORAL ARGUMENT REQUESTED

Case 2:04-cv-00363-JWS

Document 141

Filed 11/23/2005

Page 1 of 7

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substitute res bond must be based upon the fair market value of the aircraft, pursuant to the Admiralty Rules. However, the government was willing to propose a sum no lower than the dollar amount at issue. This agreement also had to be approved by all claimants. The government required that, in addition to the posting of a substitute res bond, counsel for Abed had to obtain the agreement of BCI which would probably require that the loan or lease purchase agreement be made current. Counsel for Abed could not comply with these requirements, plaintiff could not agree to anything less, and Counsel for Abed abandoned the effort. Any allegation that plaintiff withdrew its offer is incorrect and inaccurate. There was in existence at the time of the filing of a complaint a joint investigation regarding activity described in the civil complaint. That activity involved the theft of money from Inverlat Bank by Jaime Ross Castillo and his co-conspirators. That money was laundered through a number of bank accounts and has been traced into financial transactions described in the complaint and amended complaints. Counsel for Abed admit that they have engaged in conversation with James Lacy, the AUSA in charge of that investigation, as noted in their motion: 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. Claimants' motion at page 2, line 23 to page 3, line 1. The undersigned counsel for plaintiff was not a party to these conversations and is not involved in the criminal grand jury portion of any investigation. The allegation that the undersigned has made oral and written allegations that any of the claimants are under any investigation is rather odd. The undersigned is not involved in such an investigation and has no involvement with the Grand Jury, described by counsel for Abed. Counsel have not oral spoken in months and there have been no oral arguments. Therefore it is impossible to suggest that any recent oral communications could have been made. Further, claimants make several references to documents which predated the interview and stipulation obtained from Jaime Ross Castillo in which Ross provided no indication that Abed was involved in the theft of the funds from 2 Case 2:04-cv-00363-JWS Document 141 Filed 11/23/2005 Page 2 of 7

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Inverlat Bank. Ross did indicate that the funds were transferred through corporate accounts and were used to acquire an interest in all three of the aircraft. Contrary to the allegations of counsel for Abed, there has been virtually no production of any discovery which had not already been obtained by plaintiff. Despite assurances to the contrary, counsel for Abed have never shown sources for the funds used to acquire the aircraft or have demonstrated in any way or manner that the funds did not come from Romero through the activities of Jaime Ross Castillo. Stated another way, plaintiff is seeking to compel claimants to prove the truth of the allegations contained in their answer that the funds came from somewhere other than through Jaime Ross Castillo. By its very nature, such evidence, if produced and if it established the truth of the allegations in the Answer, it could not tend to incriminate. If claimants cannot produce such evidence, then that inability does not necessarily incriminate anyone. Rather, it only proves claimants lied or overstated their evidence in the answer and are attempting to gain a windfall from the possession of the funds stolen from the bank by Jaime Ross Castillo. These records concerning the source of the funds cannot establish knowledge that the funds were proceeds of the "specified unlawful activity" of international bank fraud, required for the prosecution of a criminal case for money laundering pursuant to 18 U.S.C. §1956 or 1957. However, the lack of knowledge does not translate into ownership of the funds. That is, the fact that claimants are ignorant of the source of the funds and the criminal acts involved in obtaining the funds does not mean that the stolen funds are the property of claimants. They have obtained no title to these funds and must surrender the funds to the rightful owners. ARGUMENT 1. Claimants have no Self Incrimination privilege because they are corporations. The first premise asserted by claimants for the stay is that Rule 26 requires a meeting. This issue is fully briefed by plaintiff in response to claimants' motion to quash. This argument simply ignores the scheduling Order entered in this case, and should be summarily denied. The discovery submitted by plaintiff is appropriate and is specifically tailored to the allegation of the 3 Case 2:04-cv-00363-JWS Document 141 Filed 11/23/2005 Page 3 of 7

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complaint. Claimants forget that they are a three entities or parties and have demanded separate treatment in this action. The number of interrogatories is completely appropriate for three separate and distinct parties. The Requests for Admission are specifically addressed to identified paragraphs of the Answer and require claimants to produce evidence to support each allegation, only if claimants do not admit the factual allegation. Often these requests simply seek to clarify the response which has been complicated with extraneous allegations. The discovery requested is not burdensome and is very similar to the discovery routinely utilized by plaintiff in the litigation of forfeiture actions in the District of Arizona. Counsel for claimants fail to comprehend that, as foreign corporations, that is businesses conducted in a corporate form, and the corporate officers, directors, and agents, there is no Fifth Amendment privilege regarding such financial records and related evidence. 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. Braswell v. United States, 487 U.S. 99, 102, 108 S.Ct. 2284, 2287 (1988). Plaintiff affirmatively asserts that the discovery is intended to require claimants to produce evidence that the funds it claims have a source other than those funds controlled by Jaime Ross Castillo, which counsel for claimants has repeatedly indicate it would produce. Such evidence of a legitimate source would support the position taken by claimants that the defendant aircraft is their property. Such evidence could not be seen as tending to convict claimants. However, even if the purpose was to obtain evidence for use in a criminal case, the corporations may not seek a stay because they may not assert a fifth amendment privilege. As an alternative, it is not clear when claimants think they would ever be prepared to engage in this litigation. As is obvious in the pleadings, they are and remain citizens of foreign countries out of the territorial jurisdiction of the United States of America. Under specific circumstances the voluntary absence from the jurisdiction of a U.S. Court could toll the statute of limitations. There is, therefore, no realistic limit to the stay requested by claimants. It could be indefinite. It is patently unreasonable to suggest that this case be stayed indefinitely. 4 Case 2:04-cv-00363-JWS Document 141 Filed 11/23/2005 Page 4 of 7

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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)

It is manifestly unfair to suggest that plaintiff be prevented from collecting reasonable discovery from claimants, while they have exploited an agreement to produce documentary evidence while refusing to produce any material and relevant evidence. The effect is to allow claimants to obtain discovery and prevent plaintiff from obtaining any discovery, even if that discovery is directed to proving the truth of allegations contained in the Answer filed by all three claimants. 3. Claimants may not assert a blanket Fifth Amendment privilege.

The impact of an award of a stay for the reasons asserted by claimants would effectively be an assertion of the Fifth Amendment privilege to all discovery requests. Such a blanket assertion is universally rejected. North River Ins. Co., Inc. V. Stefanou, 831 F.2d 484, 487 (4 th Cir. 1987), cert. denied, 486 U.S. 1007 (1988); Roach v. National Transportation Safety Board, 804 F.2d 1147, 1151-1152 (10 th Cir. 1986), cert. denied, 486 U.S. 1006 (1988). This rule has been applied in forfeiture cases as well. United States v. Little Al, 712 F.2d 133 (5 th Cir. 1983). If a witness seeks to assert the privilege he must claim it. Garner v. United States, 424 U.S. 648, 96 S.Ct. 1178, 47 L.Ed. 2d 370 (1976). In short, seeking a stay for improper reasons cannot be a substitute for appearing at a deposition or answering questions regarding specific allegations contained in an Answer submitted to create standing and in an effort to obtain property. There is absolutely no showing that this evidence, if it is as alleged in the Answer, will contribute to anything other than the return of the defendant Lear Jet. If, however, counsel and claimants cannot produce proof to support their factual allegations as they appear in the Answer, then they very well may be subject to sanctions by this Court and summary judgment in favor of plaintiff. However, that prospect does not warrant a stay. Claimants cannot simply allege that all discovery may convict them, but must address such allegations in each situation and with a substantial degree of specificity.

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SUMMARY Claimants have failed to provide any basis other than mere speculation to support the request for a Stay. Because the records sought to be produced are corporate records involved in the movement of funds to acquire the defendant aircraft, there is no Fifth Amendment privilege available to claimants, and therefore no basis to stay this action. Claimants have taken advantage of a liberal discovery policy and reciprocal promises of production by receiving substantial discovery from plaintiff, but refusing to produce any current, relevant, or material evidence. This motion is imposed only a few days before the discovery is due and is imposed in bad faith to prevent, delay, or avoid the discovery requirements and claimants duty to engage in discovery. This motion is presented in bad faith and should be summarily denied, as soon as possible, for the benefit of the parties engaged in this litigation. Respectfully submitted this 23 RD day of November, 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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K Lawson Pedigo Miller Keffer & Pedigo 8401 N Central Expressway , Ste 630 Dallas, TX 75225 [email protected] Douglas F Behm Jennings Strouss & Salmon PLC Collier Ctr 201 E W ashington St, Ste 1100 Phoenix, AZ 85004-2385 [email protected] 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] Allen B Bickart Law Office of Allen B Bickart PO Box 44005 Phoenix, AZ 85064 [email protected]

CERTIFICATE OF SERVICE
I.I hereby certify that on November 23, 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:

9I hereby certify that on November 23, 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 Leonard J M cDonald, Jr Tiffany & Bosco PA Camelback Esplanade II 2525 E Camelback Rd 3rd Floor Phoenix, AZ 85016

S/

Victoria Tiffany

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