Free Response in Support of 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 R enaissance 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 Defendants. 17 18 19 20 21 22 23 24 25 26 27 28 PRELIMINARY STATEMENT The plaintiff, files this Reply in support of its Motion for Reconsideration. In summary, this case is an effort by the Department of Justice (DOJ) of the United States of America, working with its counterparts in Mexico, referred to as the Procurduría General de la República (PGR) to trace and recover the proceeds of funds which were laundered through financial transactions conducted on an international basis. These funds have been traced into the financial transactions conducted in the United States and which contributed to the payment of the purchase price of the defendant aircraft in this action. For reasons involved in the legal authority in Mexico related to the relationship of international law, particularly related to the criminal investigation in Switzerland, the action seeking to recover the funds stolen from the Mexican bank can only be brought in the United States. Stated another way, if venue and jurisdiction in the United States 3. Cessna Caravan, Model 208B, Serial Number 208B-0941, Mexican Registration # XA-TUF. 2. Agusta Helicopter, Model A109E, Serial Number 11116, Mexican Registration # XA-TSR; v. 1. Lear Jet, Model 31A, Serial Number 31A-224, U.S. Registration # N224LJ; CIV-04-363-PHX-JWS REPLY IN SUPPORT OF MOTION TO RECONSIDER RE: ORDER FROM CHAMBERS DATED AT ANCHORAGE, ALASKA JULY 26, 2005 ORAL ARGUMENT REQUESTED

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can be defeated, the Abed claimants, Calezar, Ltd, Casafin, Ltd., Harslope Holdings, Ltd, Upton grove, Ltd, and SIASA will never have to account for the funds which they do not own but which were used to acquire the defendant aircraft in this action and which are now owned and controlled by Abed. Due to flagrant misrepresentation by the Abed claimants, it has become necessary to define the participants in this joint investigation. Any reference to the governments of either Mexico or the United States in the context of this case is meant to refer to the law enforcement components including the PGR and DOJ. It does not refer to the Court or Judicial system in either country, as suggested by counsel for the Abed claimants. The implication in the pleadings filed by or on behalf of the Abed claimants is that the Government of Mexico has spontaneously and unilaterally opposed the action of the arrest of the defendant aircraft. That assertion is a prevarication. The orders tendered by counsel for Abed in this action are "Amparos," often filed exparte, which address procedural issues only, not the merits. In the most recent pleadings, the moving party was SIASA, a party before this Court affirmatively seeking to frustrate the jurisdiction of this Court, by misrepresenting the significance of the "constitutional review" process in Mexico. Amparos are sought by counsel for Abed in Mexico solely for the purpose of arguing that this Court has no jurisdiction. The Amparos are consistently obtained at the last possible moment, in an attempt to prevent plaintiff from being able to accurately and truthfully respond, due to the formalities required in communication between countries complicated by the need for formal translation of documents. The other Abed claimants filed and Answer on April 12, 2005, when it became clear that the suit in Arizona would not be dismissed. SIASA filed a Statement of Interest on or about June 1, 2004, but has filed no other pleading in this action such as an Answer or motion. The possessory interest in defendants two and three may well have been protected under the form of the Substitute Custodian agreement executed by SIASA, but apparently has been violated and terminated by the action of the PGR related to the failure to make the required lease payments. SIASA is clearly associated with, if not directly controlled by, Abed. See the following paragraphs from the Second Amended Complaint and corresponding answers provided by Abed: 2 Case 2:04-cv-00363-JWS Document 111 Filed 09/26/2005 Page 2 of 17

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¶¶ 20, 21, 206, 220, 276, 302, and 378. Because SIASA has neither filed an Answer nor any motion controlled by Fed. R.Civ.P. 12, it is in default in this action and is subject to a separately filed motion for default judgment. The interest alleged by SIASA is merely a possessory interest in the aircraft based upon the alleged leases from Abed controlled companies which are claimants in this action. However, SIASA has worked in concert with the other Abed controlled entities to obtain exparte orders in Mexico which have then been presented to this Court by counsel for Abed. Counsel for Abed has consistently misrepresented the impact or extent of the Mexican Court orders obtained by SIASA in an attempt to gain advantage in this proceeding. The exhibits in the form of Mexican Court Orders attached to claimants Response (Dkt 109) and Amended Response (Dkt 110) have been materially misrepresented to this Court. Counsel for Abed has elected not to address the fact that she moved to dismiss this case on the basis that the aircraft were continuing to be operated in Mexico, when she knew that the aircraft had been taken into custody in Mexico. Ultimately, the test of the in rem jurisdiction of this Court over the defendant aircraft, and the personal jurisdiction the Court has over those claimants who appear before it is whether the claimants will comply with the orders of this Court. If claimants insist the aircraft be brought to Arizona in order to establish that the arrest warrants issued by this Court have been enforced, and if the claimants are endeavoring in every possible respect to create legal barriers in Mexico to the execution of the warrants, then the test is whether this Court will order the claimants, parties to this suit, to bring the aircraft to Phoenix. The United States and the government of Mexico are endeavoring to accomplish the task of serving the warrants in Mexico. It is not the Courts of Mexico which have unilaterally acted to prevent the service of the warrants, but the actions of subsidiaries of Abed affirmatively seeking serial exparte Amparo orders which are then affirmatively and intentionally misrepresented before this Court. It is this endeavor which has occupied so much of this Court's limited time. As one final preliminary point, plaintiff wishes to direct the attention of the Court to two U.S. District of Arizona actions in which substantial assets were forfeited in the District of Arizona. The assets were never alleged to have been in Arizona, but the venue and jurisdiction was appropriate because the criminal enterprise which acquired these assets operated within the 3 Case 2:04-cv-00363-JWS Document 111 Filed 09/26/2005 Page 3 of 17

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District of Arizona, just as did Jaime Ross Castillo. The cases are cited not due to any precedential value. In fact, no particular order entered in either of these cases was published. These cases are tendered to the Court to establish that the physical presence of the res in the District is not required for venue and jurisdiction to be found in Arizona, as falsely alleged by counsel for Abed. Please consider U.S. v. One 1986 Dassault Falcon 50, et al., CIV-93-0439PHX-RGS. This case involved the forfeiture of five multi engine jet aircraft, only one of which was located within the District of Arizona. No indictment was filed in this action, essentially because the Mexican Kingpin target of the investigation was murdered shortly after the civil suit was filed. The case proceeded against his ghost for years and was ultimately affirmed in an unreported Ninth Circuit opinion regarding unrelated issues. Defendants #1, Dassault Falcon XA-RXZ and #2, 1986 Cessna Citation III XA-RZQ were seized in Dallas, Texas; #3, 1980 Gates Lear Jet XA-REE was seized in Oklahoma City, Oklahoma; and #4, 1972 Gates Lear Jet XA-RUJ was seized in Tucson, Arizona. The final defendant aircraft, Lockheed Jet Star XAACC was not seized, but was arrested in Los Angeles, California, pursuant to a warrant of arrest in rem issued by the Arizona District Court after the complaint was filed, the same procedure utilized in the above captioned action. Four of the five aircraft had never been in Arizona and were never physically brought to Arizona, other than with the service of the warrant of arrest in rem which brought the aircraft before the District Court. The lack of the physical appearance of the aircraft in Arizona did not prevent the Court from exercising jurisdiction over the aircraft as the result of the activity identified within the District of Arizona, alleged in the complaint. Perhaps a better example is U.S. v. Paulina Dos and Lear Jet XA-PIM, CIV-95-2524-PHXRCB, which involved an ocean going yacht over 100 feet in length found in San Diego harbor and a related Lear Jet seized in Brownsville, Texas. Venue and jurisdiction of both of the yacht and Lear Jet did not depend upon their presence in Arizona. Indeed, the yacht could not travel to Arizona. Again the lack of the physical presence of the aircraft and yacht in Arizona did not prevent the Court from exercising jurisdiction over the res as the result of the activity identified within the District of Arizona alleged in the complaint. Both defendants were brought to Arizona only by the service of the warrant of arrest in rem. 4 Case 2:04-cv-00363-JWS Document 111 Filed 09/26/2005 Page 4 of 17

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Regardless of the claim by claimant that the aircraft were released from the custody of the PGR or SAE, Exhibit G, attached hereto and hereby incorporated by this reference, clearly establishes that both aircraft remain in the physical custody of the PGR/SAE and are being held for sale. As the Court and parties have learned, it is difficult and expensive to adequately retain aircraft in custody and properly maintain that aircraft. It is a much wiser course of action to dispose of such assets as quickly as possible to minimize any reduction of value and avoid the expense of maintenance and storage. In this regard Mexico would greatly appreciate a statement from the Court as to whether it objects to the sale of the aircraft or whether such a sale would be construed by the Court to deprive it of jurisdiction in this in rem proceeding. In the alternative, the United States may well ask the Court to Order the aircraft to be brought to Arizona for sale in the international market, on the basis this would be the best evidence that the in rem jurisdiction has been achieved over the res in Mexico. If this Court ordered SIASA and the other Abed claimants not to interfere with the delivery of the aircraft, both could clearly be brought to the United States for sale. Simply stated, it is in the best interest of Abed and his shell companies to work at cross purposes in both countries to frustrate this joint investigation for the sole purpose of obtaining a windfall profit at the expense of the Mexican Bank. This Court should not allow such transparent acts to whipsaw and frustrate an international investigation and the jurisdiction of this Court to consider the activity identified in the complaint. FACTUAL ANALYSIS 1. Exhibit of José Miguel Gómez Giralt. The document purports to comply with the provisions of 28 U.S.C. §1746, but fails to indicate where it was executed. More compelling is that the document is undated, in violation of the statute. On technical grounds, this pleading should not be considered. The pleading is essentially a purchased opinion regarding whether the PGR has the ability to engage in an international investigation which includes the transfer of the possession of the aircraft or the ability to sell the aircraft. (p. 1) The document clearly recites that SIASA has sought a temporary stay and review of any action conducted by the PGR while the process is reviewed. Notice that the illegal conduct complained of in this pleading is the service of process from this Court in Mexico, pursuant to the MLAT treaty. In other words, 5 Case 2:04-cv-00363-JWS Document 111 Filed 09/26/2005 Page 5 of 17

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counsel for SIASA is arguing, despite the fact it is a party before this Court, that the service of the warrant in rem of this Court in Mexico pursuant to the treaty is a violation of Mexican constitutional proportion and therefore the Mexican court entered what amounts to a stay, pending further review. A procedural stay is always granted when allegations of misconduct on the part of the government are made, as was done in this case. 1/ However, the allegations were unfounded and the Amparo dissolved. As proof of this fact, please consider that the PGR continues to hold the aircraft as set out in Exhibit G. The stay is required only to hear the procedural issues and is not a definitive trial on the merits, as admitted on the third page of the document. "While the PGR, from July 4, 2005, does possess the aircraft, it cannot dispose of the same or turn them over to third parties until the federal judge determines that it may do so." This opinion makes a point of claiming the PGR acted in defiance of the Amparo issued on July 12, 2005, when the PGR transferred the aircraft to the SAE on July 13, 2005. Such an allegation is at best peculiar and at worst a lie. There is no showing that the PGR was even aware of the exparte order. Therefore, it certainly could not act in contempt of the Court. Secondly, the PGR is required under Mexican law to transfer the aircraft to the SAE, a branch of the Department of the Treasury, in order to protect the value of the asset. Thirdly, whether an act is in contempt of a court is for the sound discretion of that court and not relevant to the consideration of whether this Court has in rem jurisdiction. As noted on the first page of the document, the purpose of SIASA was to prevent the transfer to the United States or any another third party. However, a transfer to SAE, a different branch of the government of Mexico, is hardly contemplated in the form of the order. The next paragraph is clearly inconsistent with the above admissions and is a false statement of Mexican law, imposed to confuse the issue of confiscation and service of process. (p.3) In this sense it is not true that the federal judges of Mexico are cooperating with the PGR to execute the delivery of the aircrafts (sic) to the United States, to the contrary the judges have determined that the provisional securitization is contrary to the legal norms of the our (sic) maximum law, of the Constitution of the United Mexican States.

For more detail about the Amparo please see the paper previously submitted by plaintiff, as an exhibit. 6 Case 2:04-cv-00363-JWS Document 111 Filed 09/26/2005 Page 6 of 17

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Plaintiff has never alleged that the federal judges of Mexico are cooperating with the PGR. The judges are asked to insure that the process employed by the government is fair. These judges have been approached on an exparte basis by representatives of Abed to review the process to make certain that the steps taken are constitutional. There has been no finding by any court the process has violated any constitutional provision. The Amparo only creates an opportunity to insure the res is still available for such a hearing. The assertions to the contrary contained in the above quoted paragraph is a lie. SEPTEMBER 12, 2005 ORDER Plaintiff has attempted to determine the authenticity of this order. It is apparent on its face that it was another exparte order, based upon false allegations. The representatives of the

PGR have indicated to the ICE special agents assigned to this case in Mexico, that this is an Amparo which was applied for in bad faith on the part of SIASA, acting for Abed. As is often usual in exparte applications, the judge issued the order without the disclosure and consideration of all of the facts. When those facts were explored by the Court, upon presentation by the PGR, the Amparo was dissolved. The United States is attempting to obtain some documentation regarding the present status of the proceeding and will provide it if it is available when this Reply is due. If the documentation is obtained after September 26, 2005, plaintiff will seek leave to supplement the record on this point. At page 4 of the order are listed the challenged acts, which essentially relate to the continued operation of the defendant aircraft. This position is directly contrary to the position taken before this Court regarding the in rem jurisdiction. That is, the constitutional abuse alleged by SIASA is depriving it of the use of the aircraft pending the final hearings in this action. Of course, that is the standard set by the Abed claimants in arguing that unless the aircraft were grounded in the custody of the PGR, in rem jurisdiction cannot be established in the Arizona action. Of course, plaintiff and the PGR attempted to avoid the issue with the execution of the Substitute Custodian provisions, which allowed the constructive possession of the aircraft by the PGR for the purpose of service of the in rem warrant. The Abed claimants insisted that if the aircraft continued to
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Specifically including the "Second" paragraph on the first page of the order. Document 111 7 Filed 09/26/2005 Page 7 of 17

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fly around, then process had not been served. Once the aircraft were grounded, SIASA alleged that grounding the aircraft by the PGR violated a constitutional provision. An order agreeing to hear arguments is not a finding in favor of SIASA. It merely required the hearing. The Mexican Court has previously denied relief requested by SIASA. See the bottom of page 5 and top of page 6 of this order. SIASA is the plaintiff in the Amparo action. The purpose is to maintain the status quo until a hearing is conducted. By ruling dated the twelfth of July two thousand and five, the motion to modify the suspension due to newly-discovered facts was processed, and the suspension was granted so that things would be maintained in their current state and the aircraft would remain in the hangars of the Federal Attorney General's Office in the international airport of the City of Toluca, State of Mexico, until this motion is decided, as long as to such date the acts mentioned by the plaintiff have not already been performed, i.e. that the property has not been handed over to the Provisionally Secured Property Administration Service (SAE), a third party or to the Government of the United States of America. A hearing on this matter was set for September 23, 2005. The dispute appears to be whether the Court actually granted a stay or suspension or whether it denied the requested relief by SIASA. At pages 9 and 10 of the order, the Mexican court recited the allegation by SIASA that the PGR ignored the previous orders of the court and removed the aircraft from the control of SIASA and took the aircraft into custody. The allegation is the PGR believed the request for a stay had been denied. The issue appears to turn on whether the PGR ever set about to actually seize the aircraft. From the record, it appears that the first Amparo was denied on the basis that SIASA falsely claimed the PGR would attempt to seize the aircraft in order to serve the warrants in rem from this Court. Rather, when the PGR used the substitute custodian approach, allowing SIASA to continue to use the aircraft, the Mexican judge approved of the process and denied the request for the issuance of the Amparo. Some event happened which caused that agreement to be breached and the aircraft were then brought into custody. The Mexican judge agreed the new "fact" of removal of the aircraft justified a hearing. (p.11). The significance and reach of the order is found at page 13. Please consider the following language from that order in comparison to plaintiff's Exhibit G. Based on Articles 124, 130, 136 and 138 of the Protective Order Act (Amparo) and until the principal protective order proceedings is decided with a final judgment, it is admissible to decree the definitive suspension (stay) in its favor, so that the respondent authorities immediately return the possession of the aformentioned aircraft 8 Filed 09/26/2005

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to the plaintiff and within the term of twenty-four hours prove to have complied with this decision. Exhibit G demonstrates that the aircraft remain in the custody of the government of Mexico well after the date of this order, supporting the oral contention the Amparo order was dissolved when the government had been provided an opportunity to address the false allegations made by SIASA. Please also notice the order recites an undisputed fact the aircraft in question have been "provisionally secured" as the result of the Preliminary Inquiry by the PGR. See p. 14. The second order apparently dated July 12, 2005, and attached to Abed's pleading, also very clearly expresses the interlocutory nature of the stay order and the fact the PGR was not a party to the issuance of the original order. At the end of the order, special provisions were undertaken to notify the PGR of the issuance of the order. However, again as the result of the intervening actions in these courts, the aircraft remain in the possession of the Mexican government. The Abed claimants have made much of the fact that the defendant aircraft have been provisionally secured. The point is at the time of the service of the warrants of arrest in rem, no court, not in the U.S. nor in Mexico, had entered a final judgment. Therefore, in Mexico, the proper procedure is to provisionally secure the property, pending further order from a court. It has only been the Abed claimants which seek to require the aircraft to be taken into custody, apparently simply to trigger the use of the Amparo, as alleged in the most recent pleadings filed by the Abed claimants. DECLARATION OF VIRGINIA BRONDO ROM ERO FOR SIASA This affidavit was apparently prepared on September 12, 2005, for submission in this action, not for any purpose in Mexico. She is a representative of SIASA and is aware that SIASA executed an agreement approved both by plaintiff and the PGR, referred to as a substitute custodian agreement, which allowed SIASA to continue to operate the aircraft, but also required the payment of the lease to SAE. According to her affidavit, the problem with the PGR arose from the inability of SIASA to make the required lease payments, due to the downturn in the economy in Mexico, which affected the clients of SIASA. Based upon this allegation, not supported in any respect with any documentation of a downturn in the economy of Mexico,

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Brondo Romero alleges SIASA had engaged in a debt reduction contract with Abed, dba Casafin Limited and Hartslope Holdings Limited. In other words, once the monthly payments for the lease had to be actually made, the expense became so burdensome the parties to this contract agreed to reduce the obligation, without the participation of or notice to the PGR. Debt reduction was not disclosed to the PGR at the time of the issuance of the warrants of arrest in rem and no notice of any financial hardship had been provided previously. Further, the economic relief suggested in this document is both illogical and patently false. "... payment could be realized and taken into account by covering the payment for maintenance, parts and crew training of the aircrafts (sic) property of the Irish companies." (Brondo p. 1) This passage states that the owners of the defendant aircraft would accept as a reduced payment, funds which were required to be paid to maintain the aircraft, provide replacement parts, and train the crew. Unless all of these companies are controlled by a common interest, this alleged debt reduction plan constitutes no benefit to the owners. Providing maintenance and parts is not only required in rental contracts, it is necessary to protect the value of the aircraft. Although funds diverted to the payment only of maintenance does protect the value of the aircraft, it contributes nothing toward the return of capital or even the depreciation of the aircraft, based upon hours of use. In other words, this alleged agreement works only to benefit SIASA and provides no revenue flow to the owners of the aircraft, or in their place, the PGR. In a similar manner, the owners of the aircraft would receive no benefit from accepting as payment the expenses of training the SIASA crew. Again, this makes no economic sense unless the objective is purely to circumvent the actual payment of funds pursuant to the terms of the contract. Given the obviously close relationship with the Abed claimants, it is no small wonder that post dated contracts could be produced to "prove"virtually anything. However, in the context before this Court, it should be clear the only benefit of such a contract modification is to Abed and his cash flow related to the defendant aircraft. By offering this silly and impractical contract modification, the cash flow to maintain the aircraft in operation can be essentially eliminated. If the economic situation for SIASA was actually that terrible in an arms length transaction, the contracts would simply be terminated for non payment or lack of performance and the interest of SIASA would thus end.

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ARGUMENT 1. The defendant aircraft have been placed into custody of the PGR, first by the execution of the substitute custodian agreement executed on behalf of SIASA, and secondly as the result of a breach of that agreement. The process has been undertaken by the United States pursuant to the MLAT treaty regarding enforcement of judicial orders. There is no question, no serious debate, that Mexico has acted to serve the warrants within the Republic of Mexico. The domestic action of Mexico using the provisional security (aseguramiento) is the process by which the representatives of the government of Mexico have chosen to carry out the orders of this Court. There can be no question that the warrants have been served and the defendant aircraft are subject to the orders of this Court. It is apparent also that counsel for Abed has grossly overstated the success of the Amparo process in Mexico. "...through judicial action the Mexican government prohibits removal of these aircraft from Mexico or disposition of them to a third-party." The action taken is the filing of serial exparte actions called Amparos which simply do not address the merits of the allegations contained in the pleadings filed by the Abed claimants. Simply stated, the actions taken are by Abed and SIASA to obtain a mere stay, which have been dissolved upon hearing. The allegations contained in this paragraph are simply false. 2. The status of the aircraft has not changed, that is true. However, it is not true that the status prevents this Court from exerting in rem jurisdiction over the aircraft. Rather, the affidavit, if that is what it is, of Gomez Giralt establishes merely that temporary stays have been applied for and at most two stays granted for the sole purpose of an expedited hearing. After hearing on the merits, the Amparo has been dissolved. There is no order on the merits which affords any barrior to the service of the arrest warrants. Further, this action is not by the government of Mexico, but by interested parties who seek to profit by filing false pleadings. 3. The order mentioned is a stay, and was dissolved. The stay only existed until such time as a hearing was held. This stay order cannot be seen as preventing the service of the warrants in rem in this action. 4. The order mentioned in this paragraph again is nothing more than another stay, subject to immediate review. Despite the mandatory language contained in the order, the aircraft have

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continued to be held in the custody and control of the PGR. The oral representations made by the representatives of the PGR indicate that this order was dissolved when the government had an opportunity to respond to the exparte order. 5. The amended complaint accurately states that the aircraft had not been seized by a seizure warrant prior to the filing of the civil complaint in this action. That should provide no surprise. The provisions of Fed.R.Crim.P. 41 provide for the issuance of a seizure warrant. These warrants are good only within territorial boundaries of the United States and it possessions. Simply stated, plaintiff could not seize the aircraft in Mexico with such a warrant. Similarly, a criminal restraining order can only be issued after the return of an indictment, which has not happened. The process which must be utilized in the factual situation contained in this action is the filing of the complaint and the service or a warrant of arrest in rem issued by the Court. That has been done and the warrants have been served in Mexico. In this paragraph Abed makes a completely puzzling argument. Substantial authority was provided by plaintiff for the proposition that service of process in this factual situation has been accomplished. Rather than address that authority, Abed simply denies that it exists. Then in an utter contempt or fraud upon this Court, counsel for Abed falsely asserts the following, "... the Government of Mexico has not agreed to deliver the aircraft to the United States and a Mexican Court is, in fact, prohibiting the aircraft's sale or transfer to a third party such as the United States." The Government of Mexico, defined as the PGR, has agreed to serve the warrants of arrest and honor other orders of this Court, pursuant to the terms of the Mutual Legal Assistance Treaty (MLAT) and nothing further is required at this point in time. The United States has not asked that the aircraft be delivered to the United States, certainly not prior to the entry of a final order of forfeiture. It is not required, and such an effort would certainly be condemned as premature by Abed and his claimants. However, as carefully analyzed in the factual setting, it is objectively false to suggest tany order on the merits has been presented by a Mexican Court which prohibits the Government of Mexico from complying with the MLAT requirements upon which plaintiff has relied. 6. This paragraph also relies upon the same false representation regarding the efforts of the PGR and the Courts in Mexico. However, the analysis by counsel for the Abed claimants

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regarding the constructive possession of seized or arrested property is particularly weak. The point of U.S. v. James Daniel Good Real Property, 510 U.S. 43 (1993) is the government need not exclude all productive use of property in order to effectively have control over it. In that case, the rental property was sufficiently controlled by the occupancy agreement, that the Court continued to exert control over the property, despite the admitted fact that a tenant continued to live in the house. If seizure meant that the property must be excluded from all use, as alleged by Abed, then the courts in that action would never have had control over the property. If the Supreme Court had no problem with finding it had in rem jurisdiction over the res in the Good action, there can be no question that equivalent jurisdiction has been established by the actions of the PGR, particularly after the defendant aircraft have been placed into and remain in custody. Abed claimants do not seriously attack the authority cited by plaintiff. 7. Once again counsel for the Abed claimants materially misrepresents the level of cooperation with the government of Mexico. Harmony regarding the service of the warrants in rem could not be more clearly demonstrated. The Court has seen the various communications regarding how best to serve the warrants while protecting the potential legitimate use of SIASA of the defendant aircraft, and the execution of the substitute custodian agreement in an effort to cause the least conflict among claimants and potential claimants, while still serving the admiralty process. It is an absolutely blatant lie to argue to this Court that Mexico has declined to serve the warrants. More outrageous is the claim that the award of an exparte stay of a domestic action by the PGR to allow a hearing regarding the baseless claims of SIASA is somehow elevated to affirmative and hostile action of the M exican government. Counsel for the Abed claimants is attempting to cast its flimsy arguments in the context of a provisional hearing as acts of the government. The critical point is, despite the prevarications, the aircraft remain in the custody of the PGR and subject to the orders of this Court. 8. As pointed out above, there is no basis in fact or law to support this naked allegation that Mexico and the United States are not working in harmony with the MLAT treaty, despite the furious efforts of the Abed claimants to misdirect this Court.

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9. Counsel for the Abed claimants has urged this Court to find that venue is not appropriate in Arizona, because the aircraft have not been in Arizona. Plaintiff has never alleged that they have been in Arizona. As noted in the Preliminary Statement above, the physical presence of the res in Arizona has never been required where, as here, substantial acts of the criminal enterprise have been undertaken. Rather, the critical factor is whether the criminal enterprise operated within the District of Arizona, as alleged in the complaint. The government concedes no error, but offers two alternatives. One is to transfer the matter to the District Court of Washington, D.C., which clearly has jurisdiction to hear the matter regarding the two aircraft in Mexico. The Court can transfer only those two defendants or the entire case. The point of the authority cited by plaintiff in its motion is to avoid duplicate proceedings on the same evidence, but if the Abed claimants prevail on this issue, the United States will try the case twice. The other alternative is to allow an immediate appeal on this topic. The point is, justice delayed is justice defeated. The position taken by the Abed claimants is that justice requires the case to be dismissed and not brought in any court simply so that Abed and his colleagues may maintain the windfall of the funds admittedly stolen from the victim bank in Mexico, Inverlat. Such a result preventing a hearing on the merits of the allegations contained in the complaint does not appear to be justice at all, particularly where it is obtained with materially false allegations concerning the legal process in Mexico. 10. Counsel for the Abed claimants elects not to provide any authority for the arguments made in this paragraph. At most, the argument requires two actions be maintained, if the Court accepts the proposition that the defendant aircraft 2 and 3 must be transferred to the District of Columbia. The Abed claimants fail to notice the provisions of 28 U.S.C. §1355(d) which provides that the district court with jurisdiction over an action brought under 28 U.S.C. §1355(b) can issue nation wide process. Generally, the District of Columbia has jurisdiction of crimes committed against the United States. There is no showing that trying the case in the District of Columbia would be fatal to the Lear Jet claim. However, that argument hardly overcomes the harm to Inverlat Bank which would result if the Court fails to allow a hearing on the merits of the Second Amended Complaint in at least one court in the United States.

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11. This final argument is both insulting and ignorant. The topic of whether Arizona was an appropriate place for a hearing happened well before any adverse rulings were made by this Honorable Court. Counsel for the government offered to move the case to the District of Columbia, if requested by the Abed claimants or any other claimant. The location of the forum is less important than the fact a hearing is held on the issues alleged in the complaint. To suggest that the request to avoid dismissing the two defendant aircraft entirely by transferring the case to a different District where a hearing on the merits is clearly appropriate, overstates the strength of the arguments presented by the Abed claimants. To suggest that plaintiff has had problems in this case is rather comical when compared to the level of deception and falsification presented to the Court by counsel for the Abed claimants, who are clearly motivated by the desire to keep the laundered proceeds of the multiple frauds practiced by Ross Castillo. However, the most ignorant argument is based upon the holding of U.S. v. Rutgard, 116 F.3d 1270 (9 th Cir. 1997). First, this is a criminal case which dealt with criminal forfeiture proceedings and has absolutely no bearing on the case at hand. It will never be correctly cited for any provision in this case. It dealt primarily with the failure of the government to prove that all of the billings to Medicare by a doctor were fraudulent. The government failed to provide sufficient evidence of tracing to justify the forfeiture of a large sum of money transferred out of the United States. The case was based purely on criminal forfeiture statutes which are materially different than those alleged in the complaint in this civil forfeiture action. Secondly, the case predates CAFRA which has materially altered the way in which civil forfeiture cases are handled. Counsel for the Abed claimants continually argues purely criminal cases in attacking this civil forfeiture proceeding. This approach is clearly erroneous and will be the basis of an appeal should one be necessary. The law regarding tracing is clear post CAFRA and will not be altered by the holding of Rutgard. This argument is a demonstration of just how desperate the Abed claimants are to avoid dealing with the merits of this case.

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SUMMARY There is no basis for the two defendant aircraft to be stricken from the above captioned action. The motion to reconsider the order dismissing these aircraft should be granted and the focus directed to the merits of the complaint, which can and should be competently heard by this Court in Phoenix, Arizona. The concept of fundamental fairness requires a court somewhere to hear the allegations of the fraud and money laundering which have deprived Inverlat Bank of the funds stolen from it by Ross Castillo and his colleagues. If a fair hearing cannot be held in Phoenix, then move the case, or as much of it as is appropriate to the District Court for the District of Columbia. The important thing is to progress to the merits of the case and contribute no more delay to the maliciously false and indefensible allegations of the Abed claimants. For the above stated reasons in this Reply and in the original Motion plaintiff respectfully moves this Honorable Court to reconsider its Order dated July 26, 2005, or in the alternative grant further relief as requested. Respectfully submitted this 26th day of September, 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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CERTIFICATE OF SERVICE
I.I hereby certify that on Septem ber 2 6, 20 05, I electronically transmitted the attached document to the Clerk's Office using the CM /ECF System for filing and transmittal of a No tice of Electronic F iling to the following CM /ECF registrants: Allen B Bick art Law Office of Allen B B ickart 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]

9 I hereby certify that on September 26, 2005, I served the attached document by U .S. mail, who are not registered

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participants of the CM/ECF System: Marc S . Nurik Ruden McClosky Smith Schuster & Russell, PA PO Box 1900 Ft Lauderdale, FL 33302 Gerald H G oldstein, Cynthia Eva Hujar Orr Goldstein Go ldstein & Hilley 2900 Tow er Life Bldg 310 S St Mary's St, Ste 2900 San Antonio, TX 78205 Leonard J M cDonald, Jr Tiffany & Bosco PA Camelback Esplanade II 2525 E Cam elback Rd 3rd Floo r Phoenix, AZ 85016 K Lawson Pedigo Miller Keffer & Pedigo 8401 N Central Expressway , Ste 630 Dallas, TX 75225 Mark A Platt Fulbright & Jaworski LLP 2200 Ross Ave , Ste 2800 Dallas, TX 75201

S/

Victoria Tiffany

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