Free Motion to Stay - District Court of Arizona - Arizona

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Gerald H. Goldstein TX Bar No. 08101000 e-mail: [email protected] Cynthia E. Orr TX Bar No. 15313350 e-mail: [email protected] Goldstein, Goldstein & Hilley 310 S. St. Mary's St., 29 th Floor San Antonio, Texas 78205 210-226-1463

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Plaintiff, versus 1. Lear Jet, Model 31A, Serial Number 31A-244, U.S. Registration No.N224LJ; 2. Agusta Helicopter, Model A 109E, Serial Number 11116, Mexican Registration Number XA-TSR; 3. Cessna Caravan, Model 208B, Serial Number 208B-0941, Mexican Registration Number XA-TUF, Defendants. § § § § § § § § § § § § § § § §

CIV-04-363-PHX-JWS MOTION FOR STAY OF CIVIL FORFEITURE PROCEEDINGS

Claimants Alberto Abed Schekaiban, Calezar, Ltd., and Uptongrove, Ltd., pursuant to 18 U.S.C. §§ 981(g)(2), hereby move for the stay of civil forfeiture proceedings, and state: 18 U.S.C. § 981(g)(2) provides a means by which a court must stay a civil forfeiture proceeding upon the motion of a claimant. (2)Upon 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

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(C) continuation of the forfeiture proceeding will burden the right of the claimant against self-incrimination in the related investigation or case. Congress has set forth a three-prong test which, if satisfied, requires a court to stay the civil forfeiture proceeding before it. Cf. U.S. v. McCullough, 229 F.3d 1160, flip op. p.1 (9th Cir. 2000). The pleadings, exhibits and especially the discovery requests and motions filed by the Government indicate plainly that Claimants are now in jeopardy of criminal prosecution and for that reason they must seek a stay of these proceedings. INTRODUCTION The Lear 31A was seized on September 14, 2002, in Fort Lauderdale, Florida. See Seizure Notice attached as Exhibit 1. Counsel for Claimant Abed agreed to pay for proper hangaring of the aircraft on December 3, 2002. The Government filed a forfeiture complaint on February 19, 2004. See page 1 of the forfeiture complaint attached as Exhibit 2. Although the undersigned reached an agreement thereafter, the release of the aircraft upon posting of a $900,000.00 bond, the Claimants experienced difficulty raising the bond amount and the Government withdrew its agreement. See November 30, 2004 letter attached as Exhibit 3. As described above, the Government delayed filing a forfeiture case for seventeen months, during which time the Claimants continually sought return of the aircraft as it deteriorated on the tarmac in Fort Lauderdale, Florida. Claimant Abed had voluntarily provided the Government representative conducting the criminal investigation the documents and information the AUSA requested with an agreement that those documents and information would be protected by the rule of secrecy involving grand jury investigations, Rule 6 of the Federal Rules of Criminal Procedure. 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

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clear. After the inception of the civil forfeiture in 2004, Claimant Abed met with counsel for the Government in the civil case, AUSA Reid Pixler, for settlement discussions and separately made voluntary disclosures concerning Uptongrove, Ltd.'s purchase of the Lear 31A. Thereafter, this Honorable Court entered an order for the interlocutory sale of the Lear 31A, the only defendant aircraft currently in issue. Claimants do not seek to delay the repair or interlocutory sale of the Lear 31A. They understand that this repair and sale will take some time and is progressing. The sale of the aircraft will change the nature of these proceedings from one involving an asset that can deteriorate to one that cannot, money. Although Alberto Abed believed that he had been cleared of criminal wrongdoing by the Assistant United States Attorney handling the matter before the criminal grand jury, during the recent litigation in this case concerning Claimants' motions to dismiss claims and defendants the Assistant United States Attorney representing the Plaintiff made verbal and written representations that a criminal investigation against Claimants Abed, Uptongrove Ltd., Calezar Ltd., was ongoing. These representations give rise to this Motion. CLAIMANTS ARE CURRENTLY THE SUBJECTS OF A RELATED CRIMINAL INVESTIGATION Before the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), PL 106-185 (HR 1658), was enacted, 18 U.S.C. § 981(g) read much differently that it does today. "The filing of an indictment or information alleging a violation of law, Federal, State or local, which is also related to a forfeiture proceeding under this section shall, upon motion of the United States and for good cause shown, stay the forfeiture proceeding." 18 U.S.C. § 981(g) (West 1998). CAFRA substantially reformed § 981(g), providing a process by which a claimant­not

24 merely the Government­in a forfeiture proceeding may move the court to stay the proceeding 25 in order to avoid being compelled by civil process to incriminate herself. Another notable 26 change was Congress's deletion of the requirement that an indictment be filed in order to stay 27 28 3

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the proceeding. § 981(g)(2)(A) now requires only that the court determine that "the claimant is the subject of a related criminal investigation or case." The circumstances of this case along with the words and conduct of various Government representatives compel the inference that Claimants are indeed the subject of a related criminal investigation. The government directly set out its criminal investigation against Abed, Calezar, Ltd., and Uptongrove, Ltd. in Exhibit C to it's Notice of Filing, Evidence of the In Rem Process in Mexico, attached in pertinent part as Exhibit 4, Docket #59. "The U.S. Attorney for the District of Arizona is carrying out a criminal investigation on Jaime Eduardo Ross Castillo, Alberto Abed Schekaiban, Maria Eugenia Oropesa Tellez and Myriam Serdio Carranza for violating the criminal laws of the United States by fraudulent transfer of approximately $13,000,000.00 in U.S. currency from bank accounts in the branch of Scotiabank Inverlat ("Inverlat") in Mexico City to accounts in a Swiss bank. These funds, fraudulently obtained, were used to buy airships in the United States as well as jewelry and other articles. Miriam Serdio has admitted her role in the fraud and in the conspiracy of money laundering that took place between 1997 and 2002, and Maria Oropesa was kidnapped and murdered in the fall of 2001." at p. 1, (emphasis added). "The product of the fraud was laundered in the United States through the purchase of airships. Ross Castillo and an individual by the name of Alberto Abed Schekaiban used part of the stolen product to purchase three airships between March and July of 2001: one airship Lear Jet, one airship Cessna Caravan and an Augusta helicopter." at p. 2 (emphasis added). "Also, Ross Castillo represented several fictitious Irish corporations that were used to serve as titleholders of the airships: Uptongrove Limited, Calezar Limited, Casafin Limited and Hartslope Holdings Limited. These inactive companies were owned and controlled by Abed Schekaiban. Ross Castillo and Abed Schekaiban opened another BNP account in Switzerland under the name of Calezar Limited through which they processed a significant amount of funds for the purchase of three airships listed above."at p. 3, (emphasis added). Therefore the criminal investigation is an alleged money laundering conspiracy

22 involving the theft of funds from account holders "Giraud and Romero" at Inverlat Bank 23 and alleged use of those funds to purchase three aircraft in a manner that conceals the source 24 of the funds and the identity of the alleged purchasers "Ross and Abed." Specifically, the 25 manner used to allegedly conceal the source of the funds involve the use of Calezar Limited, 26 Uptongrove Limited, and other alleged straw or nominee corporations. 27 28 4

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WHETHER THE CIVIL AND CRIMINAL LITIGATION INVOLVE THE SAME SUBJECT MATTER The same allegations, participants, entities and conduct are alleged in the Second Amended Complaint for Forfeiture. Although the Second Amended Complaint for

Forfeiture also includes allegations that funds were wrongly diverted from the creditors of the TAESA Bankruptcy, not every element and participant in the criminal investigation need be present in the civil forfeiture in order to require a stay of the civil forfeiture proceedings. In re Ramu v. Corp, 903 F.2d 312, 319 (5th Cir. 1990). In the Second Amended Complaint the plaintiff alleges the same theft of money from Inverlat Bank account holders, "Giraud and Romero", the same purchse of aircraft through alleged shell or nominee companies, "Calezar Ltd., Uptongrove Ltd.", and others, the purchase of the same aircraft allegedly by the same individuals "Ross and Abed" and the same manner of allegedly concealing the source of the funds and the owners. "As further explained below, wire transfer records from the Romero BNP account and the Ross Credit Suisse account reveal that the sole beneficiaries of the stolen funds were Jaime Ross and his business partner, Alberto Abed. Most of the stolen funds were traced directly into the acquisition of the Defendant Lear (over $900,000), Defendant Agusta ($892,000), and Defendant Cessna (over $250,000) all of which are owned and controlled by Ross and/or Abed through companies they own and control in Mexico, and other countries." Second Amended Complaint Docket, #61, at p.12, (emphasis added). "Criminal investigations regarding fraud and money laundering continue regarding Serdio, Ross, and others, related to the fraud and theft of funds from the Inverlat accounts generally referred to as the Giraud fraud." Second Amended Complaint, Docket #61, at p.21, (emphasis added). "The sole beneficiary of the stolen funds, except for the two returned transfers to the original Romero account, was Jaime Ross and, through Ross, Alberto Abed and his straw or shell companies." Second Amended Complaint, Docket #61,at p.12, (emphasis added). "Between March 27, 2000 and July 25, 2001 a total of $1,900,000 was transferred from this Calezar account to Nations Bank, Dallas, Texas, in approximately three transactions and applied to the purchase of the Lear Jet described as Defendant #1 in this complaint." Second Amended Complaint, Docket #61, at p. 52, (emphasis added).

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"Ross and Abed purchased the Lear 31A in the name of one of an Irish corporate nominees called Uptongrove Ltd." Second Amended Complaint, Docket #61, at p. 28, (emphasis added). The remaining three claims pending resolution in the Second amended complaint allege a money laundering conspiracy with the execution of money laundering transactions that are equivalent to the ongoing criminal investigation described in exhibit C above, [exhibit 4 to this motion]. FIRST CLAIM "Title 18, United States Code, Section 1956 (a)(1)(B)(i) and (h), prohibits conducting or a conspiracy to conduct a financial transaction with the proceeds of specified unlawful activity, to wit: a financial transaction occurring in whole or in part in the United States involving an offense against a foreign nation involving a fraud or a scheme to defraud a foreign bank. Defendants #1, #2, and #3 are personal property, involved in a transaction or attempted transaction in violation of section 1956 (a)(1)(B)(i) and (h), or are property traceable to such property, and are therefore subject to forfeiture to the United States of America pursuant to 18 U.S.C. § 981(a)(1)(A)." Reference to the Second Amended Complaint, Docket #61, at p. 56. SECOND CLAIM "Title 18, United States Code, Section 1956 (a)(2)(B)(i) and (h), prohibits the transportation, transmission, or transfer, and attempts and conspiracies to transport, transmit, or transfer monetary instruments or funds to a place in the United States from or through a place outside the United States knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represents the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity, to wit: a financial transaction occurring in whole or in part in the United States involving an offense against a foreign nation involving a fraud or a scheme to defraud a foreign bank. Defendants #1 #2 and #3 are personal property, involved in a transaction or attempted transaction in violation of section 1956 (a)(2)(B)(i) and (h), or are property traceable to such property, and are therefore subject to forfeiture to the United States of America pursuant to 18 U.S.C. § 981(a)(1)(A)." Reference to the Second Amended Complaint, Docket #61, at p. 56. THIRD CLAIM "Title 18, United States Code, Section, 981(a)(1)(C), subjects to forfeiture any property, real or personal, which constitutes or is derived from proceeds traceable to a violation of any offense constituting specified unlawful activity, to wit: a financial transaction occurring in whole or in part in the United States involving an offense against a foreign nation involving a fraud or a scheme to defraud a foreign bank, (as defined in paragraph 7 of section 1(b) of the 6

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International Banking Act of 1978) as "specified unlawful activity" is defined in 18 U.S.C. §1956(c)(7)(B)(iii). Defendants #1, #2 and #3 are personal property, involved in a transaction, attempted transaction, and a conspiracy to conduct such transactions in violation of section 18 U.S.C. §1956(a)(1)(B)(I); §1956(a)(2)(B)(i); §1956(c)(7)(B)(iii); and §1956(h) of this title, or are property traceable to such property, and are therefore subject to forfeiture to the United States of America pursuant to 18 U.S.C. § 981(a)(1)(c)."Reference to the Second Amended Complaint, Docket #61, at p. 57. Therefore, the pending criminal investigation and this civil forfeiture proceeding are related.

6 Both actions are being pursued by the United States Attorney's Office in Arizona. 7 The Assistant United States Attorney pursuing this forfeiture proceeding is in the Phoenix, 8 Arizona, office of the United States Attorney. The pending claims that the Second Amended 9 Forfeiture Complaint and all discovery in this civil forfeiture case is being directed at the 10 subject matter and targets of the criminal investigation. See Discovery requests attached as 11 Exhibit 5. The first interrogatory, #51, requests Abed's income from 1997 to 2002, the same 12 period as the period of the money laundering conspiracy under investigation. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 "Admit that defendant number 1 was purchased in part with funds provided by Jaime Ross Castillo which were obtained from bank accounts of Enrique Giraud Mijares (Giraud)and others at Scotiabank Inverlat, Lomas Palmas Branch, by wire transfers, travelers cheques, and cash, conducted by Account Executive Myriam Serdio." Request for Admission No. 6, at p. 10, attached as Exhibit 5. The discovery also inquires of Calezar Ltd., Uptongrove Ltd., and Abed. "A. Admit that Abed used Uptongrove Ltd., Casafin Ltd., Calezar Ltd., and Hartslope Holdings Ltd. as corporate nominees to acquire aircraft and move money required to purchase the aircraft. B. Admit that Abed directed Ross and others to use Uptongrove Ltd., Casafin Ltd., Calezar Ltd., and Hartslope Holdings Ltd. as corporate nominees to acquire aircraft and move money required to purchase the aircraft. C. Admit that Calezar Ltd. is a business or corporate name used to open a Swiss account at BNP through which a large portion of the funds passed to "State each source and amount of income you, have earned for the five (5) years prior to September 16, 2002, and whether you have filed a tax return with the Internal Revenue Service or state or local tax authorities for each of the these five (5) years. If the tax returns were filed in Mexico rather than the United States indicate the governmental unit which required the filing of the tax return." Discovery also concerns funds stolen by Ross from Inverlat bank by Serdio from Giraud and others.

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acquire many of the aircraft listed above. D. Admit that one principal activity stated for Calezar Ltd. in its corporate forms is the company was to act as a corporate nominee and be dormant, and it remained dormant until approximately April 2001, when the aircraft acquisitions commenced."... F. Admit that one principle activity stated for Uptongrove Ltd. in its corporate forms is the company was to act as a corporate nominee and be dormant, and it remained dormant until approximately April 2001, when the aircraft acquisitions commenced." Request for Admission No. 28, at pp. 34-36, attached as Exhibit 5. The inquires also involve the allegedly stolen Romero funds.

7 8 9 10 11 Therefore, the civil discovery sought by the Plaintiff concern the same allegations, 12 participants, entities and conduct as are set out in its description of the pending criminal 13 investigation. 14 CLAIMANTS HAVE STANDING TO ASSERT A CLAIM IN THIS CIVIL 15 FORFEITURE PROCEEDING 16 17 18 19 20 21 22 23 24 25 26 27 28 8 In order to dispose of the most easily demonstrated requirement, Claimants now address § 981(g)(2)'s second prong of standing. Claimants filed claims asserting their in interest in the property at issue in this proceeding. Their property interest stands "At paragraph 311 of the answer, claimants deny the Defendant Cessna and Agusta aircraft were paid for in part with stolen Romero funds from the Ross Credit Suisse account as shown below. Admit that claimants have no evidence of financial records which contradicts or disproved the information set our in paragraph 311 of the most recent Complaint, to which claimants' Answer responds." Request for Admission No. 35, at p. 43, attached as Exhibit 5.

unchallenged by the Government. Claimants have standing to assert their claim in this proceeding, and thus the second prong of § 981(g)(2) is satisfied. THE CONTINUATION OF THIS FORFEITURE PROCEEDING WILL BURDEN THE CLAIMANTS AGAINST SELF-INCRIMINATION Although Federal Rule of Civil Procedure 26(f) requires parties to engage in a case management conference prior to the commencement of discovery to develop a discovery plan, the Government has recently submitted a litany of discovery requests in its First Set of Non-Uniform Interrogatories and First Request for Production of Documents and Request

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for Admissions and has noticed the deposition of the one of the Claimants, Alberto Abed. Although Rule 33(a) limits a party to twenty five interrogatories, the Government has included fifty hybrid requests for admission-interrogatories1 (with subparts) and eleven independent interrogatories. Additionally, the Government has submitted nine exploratory requests for production of documents. See Exhibit 5. Finally, the Government has attempted to served Mr. Abed with a notice of deposition scheduled for December 13, 2005. See Exhibit 5. Although the general nature of this voluminous discovery request is exploratory, covering almost every document related to Claimants' existence from 1997 to 2002, the particular nature of several specific requests is targeted at gathering evidence in the criminal investigation described above. It is clear from these discovery requests that the Government is seeking to compel information from Claimants which may potentially be used against them in a criminal proceeding arising from its current investigation. Claimants' set out above at page 6 and 7 examples of the Discovery requests which illustrate that the Discovery sought by the Government in the civil proceeding is intended for use in the ongoing criminal investigation. The same persons, Ross, Abed, Giraud and

17 Romeo, the same entities, Uptongrove Ltd., Calezar Ltd., Inverlat, U.S. Lear Jet, the same 18 19 20 21 22 23 24 25 26 27 28 9 The Government has ended every one of its requests for admissions with the following boilerplate interrogatory language: "If you responded to Request for Admissions 25D with anything other than an unqualified admission answer the following Interrogatory __ (a) State every fact you rely upon in making this response. (b) Identify every document you rely upon in making this denial and as to each such document identify the document by title author and date state the current or last known custodian of the document describe the subject matter addressed in the document and state the substance of the information contained in the document as it relates to this response. (c) Identify every witnesses who can provide testimony in support of this response and give the witnesses personal addresses and telephone number businesses addressees and telephone17 number subject matter on which the witnesses is expected to testify and substance of the expected testimony."
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purchase of the same three aircraft, the Lear Jet, the Agusta, and Cessna and the same offenses, bank fraud, money laundering and conspiracy are alleged in discovery requests and described in the criminal allegations. Therefore, claimants, without in any way admitting any criminal liability, contend that by submitting answers to these very broad requests that are related to the persons, entities, offenses and conduct described as the pending criminal investigation and continuing in the instant proceeding will burden their rights against self-incrimination. Accordingly, the third prong of § 981(g)(2) is satisfied. GRANTING A STAY OF THESE PROCEEDINGS WILL NOT AFFECT THE ORDERED SALE OF DEFENDANT AIRCRAFT This Court has previously entered an order for the interlocutory sale of the Defendant aircraft. It may also enter a stay required at this point in these proceedings without adversely affecting the ordered sale of the Defendant Lear 31A. 18 U.S.C. § 981(g)(6) provides: "Whenever a civil forfeiture is stayed pursuant to this subsection, the court shall enter any order necessary to preserve the value of the property or to protect the rights of lienholders or other persons with an interest in the property while the stay is in effect." Accordingly, the Court may stay this proceeding while maintaining its authority to preserve the assets in issue and the rights of other parties in those assets. CONCLUSION Claimants were at one time assured by the Government on December 3, 2002 that they were not subjects of a criminal investigation. However, over the course of this proceeding, it has become apparent from the Government's own Motions, Pleadings, Exhibits and Discovery responses that any information provided to the Government will be used against Claimants to their detriment. The Government cannot be allowed to use the liberal process of civil discovery to gather evidence that will be used in a criminal investigation. It is this principle that prompted Congress to enact the protections of CAFRA such as the provision requiring a stay of proceedings, § 981(g)(2). Claimants now assert that their rights against self-incrimination will be burdened in the Government's ongoing parallel civil forfeiture 10

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proceeding and criminal investigation and respectfully request the Court stay these civil forfeiture proceedings until such investigation is resolved. Cf. U.S. v. ONE PARCEL OF REAL PROPERTY KNOWN AS 16614 Cayuga Road., 69 Fed. Appx. 915, 918 (10 th Cir. 2003) [unpublished], attached as Exhibit 6. Respectfully submitted, GERALD H. GOLDSTEIN Bar No. 08101000 CYNTHIA EVA HUJAR ORR Bar No. 15313350 GOLDSTEIN, GOLDSTEIN & HILLEY 310 S. St. Mary's St. 29 th Floor Tower Life Bldg. San Antonio, Texas 78205 210-226-1463 210-226-8367 facsimile BY: ____/s/___________________________ Cynthia E. Orr CERTIFICATE OF SERVICE I HEREBY CERTIFY that on November 11, 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: Reid Pixler Assistant United States Attorney 2 Renaissance Sq. 40 N. Central, Ste. 1200 Phoenix, Arizona 85004-4408 [email protected] Allen B. Bickart 6508 N. 10 th Place Phoenix, Arizona 85014 [email protected] Douglas F. Behm Jennings Strouss & Salmon P.L.C. Collier Cntr. 201 E. Washington St., Ste. 1100 Phoenix, AZ 85004-2385 [email protected] Lawson Pedigo Miller, Keffer & Pedigo 8401 N. Central Expressway, Ste. 630 11

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Dallas, Texas 75225 [email protected] and via U.S. Mail, first class, to the following who are not registered participants of the CM/ECF: Jennifer Collins Mark Hopson Sidley, Austin, Brown & Wood 1501 "K" Street, N.W. Washington, D.C. 20005 Geoffrey Young Ruden McClosky 150 2 nd Ave., Suite 1700 St. Petersburg, FL 33701 Marc S. Nurik, Esq. Ruden, McClosky, Smith, Schuster & Russell, P.A. 200 East Broward Blvd., Ste. 1500 P.O. Box 1900 Ft. Lauderdale, FL 33302 and Leonard J. McDonald, Jr. Tiffany & Bosco, P.A. 2525 E. Camelback Rd. Phoenix, AZ 86015-4237. __/s/_______________________________ Cynthia E. Orr

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Plaintiff, versus 1. Lear Jet, Model 31A, Serial Number 31A-244, U.S. Registration No. N224LJ; 2. Agusta Helicopter, Model A 109E, Serial Number 11116, Mexican Registration Number XA-TSR; 3. Cessna Caravan, Model 208B, Serial Number 208B-0941, Mexican Registration Number XA-TUF, Defendants. § § § § § § § § § § § § § § § § §

CIV-04-363-PHX-JWS

ORDER GRANTING STAY OF CIVIL FORFEITURE PROCEEDINGS THIS CASE came before the Court on Claimants' Alberto Abed Schekaiban, Calezar Ltd., and Uptongrove Ltd., Motion for Stay of Civil Forfeiture Proceedings. The Court has reviewed the record and is otherwise advised in the premises. The Court finds that, there is currently a criminal investigation of Claimants pending, related to this civil forfeiture proceeding, Claimants have standing to assert a claim in the Lear 31A and continuing these proceedings will burden Claimants' right against self-incrimination, pursuant to 18 U.S.C. § 981(g)(2). Accordingly, IT IS HEREBY ORDERED that civil forfeiture Case No.CIV-04-363-PHX-JWS including all related discovery, is stayed until such time as the criminal investigation or

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prosecution is resolved. The repair of the Lear 31A at the Plaintiff's expense and its interlocutory sale will proceed as previously ordered.

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 DONE AND ORDERED, on this ______ day of ________________, 2005. ___________________________________ UNITED STATES DISTRICT JUDGE

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