Free Motion for Leave to File - District Court of Arizona - Arizona

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Gerald H. Goldstein TX Bar No. 08101000 Cynthia E. Orr TX Bar No. 15313350 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 § § § § § § § § § § § § § § § § §

CIV-04-363-PHX-JWS

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. Cessna Caravan, Model 208B, Serial Number 208B-0941, Mexican Registration Number XA-TUF, Defendants. 2. Agusta Helicopter, Model A 109E, Serial Number 11116, Mexican Registration Number XA-TSR; 1. Lear Jet, Model 31A, Serial Number 31A-244, U.S. Registration No.N224LJ;

PROPOSED AMENDED RESPONSE TO PLAINTIFF'S MOTION FOR RECONSIDERATION OF COURT'S ORDER [DOCKET NO. 94]

1. The Agusta Helicopter, Model A109E, Serial Number 11116, Mexican Registration number XA-TSR and Cessna Caravan, Model 208 B, Serial Number 208B-0941, Mexican Registration number XA-TUA remain under provisional security with a new bailee. The important point is that their status remains the same as was previously noted in Docket No. 84, "RESPONSE TO PLAINTIFF'S NOTICE OF FILING EVIDENCE OF SERVICE OF IN REM PROCESS." Provisional security (aseguramiento) is not seizure of the aircraft and that through judicial action the Mexican government prohibits removal of these aircraft from Mexico or disposition of them to a third-party. 2. Also, as previously noted in Docket No. 84, "RESPONSE TO PLAINTIFF'S NOTICE OF FILING EVIDENCE OF SERVICE OF IN REM PROCESS,"at paragraph 6,

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U.S. Customs asked that a new provisional security order be obtained against the Cessna and Agusta above. Thus, the aircraft are subject to aseguramiento, where the owner is not deprived of title or possession of the object. The aseguramiento does make a limited restriction on the owner's right to sell the object, to place a lien upon it, or to take the object out of the country. See Declaration of Bernardo Miguel Aramburu, Exhibit 3 to Docket No. 84, "RESPONSE TO PLAINTIFF'S NOTICE OF FILING EVIDENCE OF SERVICE OF IN REM PROCESS. The prior bailee of the above aircraft was is SIASA and is now SAE.1 The status of these aircraft has not changed. See affidavit of Jose Miguel Gomez Giralt, attached as Exhibit 1. See also translation by a certified Federal Court translator of Government's exhibits D and E (a cover letter dated July 20, 2005, and contract for storage and maintenance of the Agusta and Cessna dated July 13, 2005) demonstrating that these exhibits show that the custodian agreement transfers the aircraft to SAE for maintenance and safety, attached as Exhibit 2. These documents also indicate that the person who received the aircraft will secure them and they will not be used, transferred, encumbered or leased. 3. On page six of Exhibit E, the contract states that "pursuant to the Federal Law for the Administration and Transfer of Property of the Public Sector and Article 1826, third paragraph of the Federal Code of Criminal Procedure said Administration will not be able to use, transfer, encumber or lease said aircrafts." (Page 4 in the original), Translations attached as Exhibit 2. 3.4. In addition on July 12, 2005, the Judge Mario Oscar Lugo Ramirez, Justice of the Third District Protective Orders and Federal Civil Trials Court in the State of Mexico issued an order providing that the aircraft be kept in Mexico. See attached as Exhibit 3 order and translation by a Mexican Court Translator stating that it prohibits the aircrafts' transfer to the Provisionally Secured Property Administration Service to any third party or to the Government of the United States of America. See Order of the Justice of the Third District

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See Declaration of Virginia Brondo Romero attached as Exhibit 6. 2

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Protective Orders and Federal Civil Trials Court in the State of Mexico and English translation attached as Exhibit 3. 4. On September 13, 2005 Counsel received an order from the same court ordering the release of the Agusta Helecopter, Model A 109E, Serial Number 11116, Mexican registration Number XA-TSR and the Cessna Caravan, Model 208B, Serial Number 208B0941, Mexican Registration Number XA-TUF to SIASA for its continued operation of the aircraft. See Order of the Justice of the Third District Protective Orders and Federal Civil Trials Court in the State of Mexico dated September 12, 2005 and certified on September 13, 2005, attached as Exhibit 2. The English translation of this order will be provided to this Honorable Court by Friday, September 16, 2005 through a Notice of Filing of the remainder of Exhibit 2 to this Amended Response. 5. In the Second Amended Complaint for Forfeiture in rem filed on March 28, 2005, the Government represents that neither the Agusta or the Cessna are seized. See page 5, paragraphs 17 and 18 of the Second Amended Complaint attached as Exhibit 4. The Government notes that it had sent arrest warrants in rem to the Republic of Mexico but concedes this does not constitute seizure of the aircraft. See page 5 attached as Exhibit 4. At that time, Government's Exhibit C, the "agreement to secure airships," stated that the Agusta and Cessna were secured provisionally as of March 4, 2005. See page 53 of Government's Exhibit C attached to their Notice of Filing Evidence of Service of in rem Process in Mexico, attached as Exhibit 5. Therefore, the Government recognizes that provisional security of the aircraft does not constitute seizure of them. Thus, the crux of the Government's argument is that mere possession is constructive control. However, neither Mexican law, the Government's admissions in its' Second Amended Complaint nor the law of this country recognizes mere possession of an item by the foreign government as constituting constructive control by the U.S. Government. This is especially so when the Government of Mexico has not agreed to deliver the aircraft to the United States and a

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Mexican Court is, in fact, prohibiting the aircraft's sale or transfer to a third party such as the United States. 6. Plaintiff cites several cases in support of this argument that the United States has constructive possession of the Defendant aircraft. First, Plaintiff cites U.S. v. James Daniel Good Real Property, 510 U.S. 43 (1993) for the proposition that a "substitute custodian agreement" that the Federal Government issued to allow rental tenants to remain in a home being seized in the United States is "exactly the same as presented to this Court with respect to Defendants number 2 and number 3." Plaintiff's Motion to Reconsider at p. 10. However, the Order of Aseguramiento is a restraint upon alienation issued by the Mexican Government binding upon the company leasing the aircraft and is distinguishable from the agreement in James Daniel Good Real Property. In that case, the United States Government had seized the property and entered into an agreement to allow the tenants to remain inside. The real estate was in Hawaii and thus no issue concerning an agreement by a foreign sovereign to produce the property to the U.S. in adherence to a U.S. Forfeiture Order was involved. By contrast, in the case now before the Court, the Mexican Government has merely issued a temporary restriction upon alienation, not a seizure of the property followed by a granted permission of use. Furthermore, the property at issue is not in the United States as was the James Daniel Good Real Property. The question in that case was whether the occupancy of the renters destroyed the possession of the United States Government. However, the question here is whether the United States has achieved constructive possession via the actions of the Mexican Government. Since the Mexican Government has not agreed to deliver the aircraft to the United States and a Mexican Court has prohibited their transfer, the aircraft are not in the constructive control of the United States. 7. Plaintiff next cites the Third Circuit case of Contents of Account Number 0301288, held in the name of Tasneem Jalal, 344 F.3d. 399 (3 rd Cir. 2003), as well as the Second Circuit case of U.S. v. All Funds on Deposit in any Accounts Maintained in the Names of

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Heriberto Castro Meza, 63 F.3d. 148 (2 nd Cir. 1995), pointing out factors the Court has considered namely cooperation of the foreign government and the existence of a treaty between the two. However, the Court will take note that the United States Government, during the course of this case, has on several occasions requested that the Mexican Government seize the Defendant aircraft. The Mexican Government has declined to do so on both occasions. According to the facts of this case, the United States and the Mexican Government are not dancing to the same tune, and the Mexican Government is most certainly not "acting as a agent of the U.S." 63 F.3d. 148, 154. Harmony of action between two Governments, the United States and some foreign government, which is the common underlined feature of the cases the Plaintiff cites is simply not apparent in this case. The fact that the Mexican Government has declined to comply fully with the United States Government's request to seize the Defendant aircraft highlights most clearly that the United States Government does not constructively possess the Defendant aircraft. To the contrary, nearly 18 months after this case was initiated by the United States Government, the Mexican government is not permitting the subject aircraft to leave Mexico and absent a change in a judicial order such departure will not be permitted. 8. No agreement has been reached with the Mexican Government in this case to enforce a U.S. forfeiture order. In every case cited by the Government regarding constructive possession such agreement was present at least initially. Therefore, the cases are inapposite to this case. VENUE 9. Without making reference to the proper federal statute under which venue may be transferred, 28 U.S.C. §1404, the Plaintiff now seeks in the alternative for a transfer of venue. It should be noted that such request for transfer is being made eighteen months after the filing of this action, originally made in February 20, 2004. Without making a reference to the proper statute Plaintiff belatedly now seeks a change of venue to the United States

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District Court for the District of Columbia. As this Court is aware, there are two relevant statutes for motions for transfer of venue, 28 U.S.C. §1404 and 28 U.S.C. §1406. Apparently conceding, at least conditionally, that venue is improper in Arizona with respect to the Cessna and Agusta, Plaintiff's implicit motion would be governed by §1406. This section provides : "A. The District Court of the District in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer the case to any district or division in which it could have been brought." 10. The key language is "in which it could have been brought." A proposed transfer

9 to the United States District Court for the District of Columbia suffers from the same defect 10 in venue that exists in the present case. The aircraft are not located within the District of 11 Columbia and are not in the constructive possession of the Government of the Republic of 12 Mexico or the United States. While, alternatively, the Plaintiff can make the argument that 13 the District of Columbia would be proper venue under 28 U.S.C. §1355 as to the Agusta and 14 Cessna, §1355 would be inapplicable as to the Lear because the property is located within 15 the state of Florida. Transfer to the District of Columbia to save the claims as to two aircraft 16 would be fatal as to the claims regarding the third aircraft. 17 11. The Court should also be mindful of the fact that a request to transfer venue under 18 §1406 to the District of Columbia may be nothing more than disguised forum shopping, or 19 worse judge shopping. Plaintiff has experienced some problems in the prosecution of its case 20 thus far. In addition, there are substantive distinctions between the laws of tracing under the 21 forfeiture statutes as interpreted by the U.S. Court of Appeals for the District of Columbia 22 and the substantive rules as determined by the Ninth Circuit. In this Circuit under U.S. v. 23 24 accounts from which purchases were made of items they seek to forfeit did not have 25 sufficient "clean funds" to cover the purchase or it cannot pursue a forfeiture claim under 18 26 U.S.C. §1957. 27 28 6 Money from a co-mingled account is presumed to be clean until the Rutgard, 116 F.3d 1270, 1291-92 (9 th Cir. 1997), the Government must prove that the

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Government can show that an aggregate amount withdrawn from an account containing comingled funds exceeds clean funds. U.S. v. Rutgard, 116 F.3d 1270, 1291 (9 th Cir. 1997). In contrast, in the D.C. Circuit this tracing law is rejected explicitly in U.S. v. BraxtonbrownSmith, 278 F.3d 1348, 1355 (D.C. Cir. 2002), citing U.S. v. Rutgard, 116 F.3d. 1270 (9 th Cir. 1997), and claiming this holding is a minority view. Since a transferee jurisdiction may apply its law to a transferred case, the transfer sought by the Government may be intended to avail itself of more favorable tracing law. See Newton v. Thomason, 22 F.3d 1455, 1460 (9 th Cir. 1994)[citing In re Korean Airlines Disaster, 820 F.2d 1171, 1176 (D.C. Cir. 1987). 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

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I HEREBY CERTIFY that on September 12 th , 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

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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 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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