Free Reply - District Court of Arizona - Arizona

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DIANE J. HUMETEW A 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 NOW COMES Plaintiff, United States of America, by and through its attorney, DIANE J. v. RUBEN LOPEZ-FELIX, Defendant. GOVERNMENT'S REPLY IN SUPPORT OF ORDER TO SHOW CAUSE ISSUED APRIL 16, 2008 CR04-0014-001-PHX-DGC

15 HUMETEWA, United States Attorney for the District of Arizona, and Reid C. Pixler, Assistant 16 United States Attorney, and respectfully submit a Reply in support of the Order to Show Cause. 17 18 19 SUMMARY OF FACTUAL BACKGROUND 1. On or about July 7, 2004, the record reflects a $100,000 cash bond was posted on behalf

20 of defendant by his attorney, Jilbert Tahmazian. The source of the funds was not identified in the 21 documentation submitted with the bond or the Order Setting Conditions of Release. 22 2. Pursuant to the terms of a plea agreement a Final Order of Forfeiture in the form of a

23 Money Judgment in the amount of $100,000 was entered by the Court on September 20, 2006. 24 That judgment remains unsatisfied. 25 3. John Boyle, counsel for the government, made four requests of Jilbert Tahmazian

26 regarding the identity and source of the funds used to provide the cash bond in the amount of 27 $100,000. Counsel declined to provide any documentation regarding the source and ownership 28

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1 of the funds. Because counsel posted the bond on behalf of his client, it can be presumed he knew 2 the source of the funds and the identity of the individuals who provided the cash. 3 4. The terms and conditions of the appearance bond have been met and the funds in the

4 amount of $100,000 are available to be returned to the owner, provided the funds are not the 5 property of the defendant. 6 5. When no response was provided by counsel for defendant regarding the source of the

7 funds, counsel for the government requested an Order to Show Cause why the $100,000 should 8 not be applied to pay the outstanding forfeiture judgment, pursuant to 28 U.S.C. §2044. 9 10 6. The Court entered the Order on April 18, 2008. 7. Only after the entry of the Order did counsel for defendant provide six declarations from

11 seven individuals claiming they were the source of the funds provided to post the bond. The 12 documents are not supported by evidence regarding how the persons acquired the funds, where 13 the funds were held or how the funds were transmitted to defense counsel. 14 15 16 ARGUMENT Based upon research conducted after receipt of the Response filed by defendant, there appears

17 to be only three reported cases which consider 28 U.S.C. § 2044. All of these cases turn on facts 18 presented in the record regarding the identity of the person who posted the bond and the 19 availability of the funds pursuant to the terms of the statute. However, it also appears there were 20 conflicting reported cases regarding the ability to collect judgments, fines, or costs from bail 21 proceeds prior to the enactment of the statute. 22 23 24 25 26 27 28 Section 2044 does not precondition bail on the payment of any fine. It is a simple procedural mechanism by which the government, after the purposes of bail have been served, may make a motion as a judgment creditor that the court order the bond fund be delivered to it. Although garnishments of bail and the like have often been disallowed as interfering with the judicial process and harmful to the purposes of bail, see, e.g., Bankers Mortgage Co. V. McComb, 60 F.2d 218, 221 (10 th Cir. 1932), as we noted, courts have long had the discretion to order the disbursal of bond funds, after the defendant has appeared and the purpose of bail has been served, to those with superior claims on the funds. See id; United States v. Rubenstein, 971 F. 2d 288, 294 (9 th Cir. 1992); Landau v. Vallen, 895 F.2d 888, 892 (2 nd Cir. 1990); United States v. Cannistraro, 871 F.2d 1210, 1212-13 (3 rd Cir. 1989); United States v. $250,000, 808 F.2d 895, 901 (1 st Cir. 2

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1987); Fed.R.Civ.P. 69(a). Section 2044 is merely a procedural variant of that postappearance discretion, and therefore does not implicate the excessive bail clause of the Eighth Amendment.

3 United States v. Higgins, 987 F.2d 543 547-48 (8 th Cir. 1993). 4 The issue of the ownership of the funds was not disputed in Higgins. Higgins apparently

5 alleged he posted the bond and requested the return of the bond after sentencing. The 8 th Circuit 6 found it was within the sound discretion of the trial court to apply the proceeds of the appearance 7 bond to the satisfaction of the obligations imposed by the Trial Court at sentencing. 8 In the next reported case the government stipulated the bond money was posted by the brother

9 of the defendant. The trial court held that the plain meaning of the statute required the funds to 10 be returned to the third party. 11 12 13 14 United States v. Equere, 916 F Supp 450, 452 (E.D. Pa. 1996). 15 The most recent case involved a situation where a defense attorney posted the appearance Section 2044 grants courts authority to transfer bail funds if a defendant's own money has been used to post bond. The statute, however, does not extend such authority to a situation like the present case, in which a third party, not the defendant, has provided his own money to post defendant's bail.

16 bond from the proceeds of a retainer paid to the attorney by the defendant. The trial court reported 17 facts based upon the record which had been presented. 18 19 20 21 22 23 24 United States v. Sparger, 79 F. Supp. 2d 714, 715 (W.D. Texas 1999). 25 Although the results differ between the cases, what is common is a clear factual background Mr. Sparger cashed in three certificate of deposits, which totaled thirty thousand dollars ($30,000), and he paid Mr. Aaron, in cash, the twenty thousand dollar retainer fee ($20,000). Mr. Sparger surrendered to the United States Marshal's Service in Midland, Texas. This Court set the conditions of release for Mr. Sparger, which included an appearance bond in the amount of $5,000 to be deposited with the Clerk of the Court. Mr. Aaron posted Mr. Sparger's bond by depositing $5,000 in cash in the Clerk's Office in Midland, Texas. This is corroborated from the receipt issued by the Clerk's office. The money used by Mr. Aaron was part of the $20,000 retainer fee paid by defendant Sparger.

26 concerning the source and ownership of the funds at issue. Funds owned by the defendant and to 27 be returned to him were available to pay his obligation to the United States. Funds provided by 28 3

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1 a brother were not. The closer question involved funds paid by the defendant to his attorney as 2 part of a retainer. Because the funds comprising the retainer were considered to have been earned 3 by the attorney, despite the fact the attorney violated local rules by posting the bond with them, 4 the trial court held the cash should be returned to the attorney. 5 Based upon the language of the statute and the analysis of the above cases, it appears the term

6 "third party surety" means a person who deposits bond funds in which the defendant has no 7 ownership interest. The purpose of the statute is to obtain a defendant's money to satisfy a 8 defendant's criminal indebtedness. The family members involved in this matter are on notice of 9 the arrest of defendant for the drug trafficking offenses for which they allegedly posted the cash 10 bond. Therefore, if the family members are merely conduits through which the funds were 11 processed for delivery to the Court, they can neither qualify as innocent owners of the funds 12 pursuant to 18 U.S.C. § 983(d)(3) nor would they qualify as holding a superior title to the funds 13 or as a bona fide purchaser for value without notice pursuant to 21 U.S.C. §853(n)(6). An 14 ownership interest does not arise if the questioned funds were delivered to these persons solely for 15 the purpose of posting the appearance bond. The naked assertion, drafted by counsel and 16 unsupported by evidence, that the funds contributed to the pool of cash used to post the bond came 17 from "... my own money..." is inadequate to establish any of the family members had ready access 18 to such funds independent of contributions from defendant or his criminal associates. 19 However, more troubling is the lack of documentary evidence to support the allegations or The record in this action contains only the unsupported

20 assertions presented by counsel.

21 declarations of family members. The Ninth Circuit addressed a similar issue in a case which 22 predated 28 U.S.C. § 2044. 23 24 To release the funds, it was necessary to determine to whom they should be released. See Arnaiz, 842 F.2d at 222 ("the court's statutory duty of `releas[ing] and bail' [cannot] be fulfilled without a determination of which party [is] entitled to receive it").

25 United States v. Rubenstein, 971 F.2d 288, 293 (9 th Cir. 1992). 26 The United States has not had an opportunity to independently verify or challenge these

27 unsupported allegations, provided for the first time in defendant's Response. If funds belonging 28 4

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1 to defendant were passed through these individuals for the purpose of posting the bond, then 2 pursuant to the cited statutes and the reasoning of Sparger, id., the ownership of the funds has not 3 changed and the cash remains the property of defendant. As to the factual issue before the court 4 there is no evidence in the record regarding the source and ownership of the funds used to post the 5 $100,000 cash bond contained in the tendered exhibits. No financial evidence or documentation 6 was provided which demonstrated the funds came from a source other than the defendant. No 7 evidence of the manner of the transmission of the funds to counsel for the stated purpose was 8 provided. In short, there is no record before the Court upon which it would be appropriate to 9 Order the delivery of the funds to third parties. Upon this record and absent any legitimate proof 10 the funds were contributed by third parties, the United States is entitled to satisfy the judgment 11 from the cash bond. 12 Rather than press for the immediate satisfaction of judgment on this record, plaintiff urges this

13 Honorable Court to allow the parties to develop the factual record, as suggested in Higgins, supra, 14 with the use of Fed.R.Civ.P 69(a). Discovery pursuant to the Civil Rules is requested because 15 proceedings related to the enforcement of a bond forfeiture or the remittence of bond proceeds, 16 although arising from a prior criminal proceeding, are considered civil actions. United States v. 17 Vacaro, 51 F.3d 189, 191 (9 th Cir. 1995); United States v. Plechner, 577 F.2d 596, 597-98 (9 th Cir. 18 1978); United States v. Sar-Avi, 255 F.3d 1163, 1167 (9 th Cir. 2001). A similar process can be 19 utilized to identify the source of the funds pursuant to the holding of United States v. Nebbia, 357 20 F.2d 303 (2d Cir. 1966). If an order enters which allows plaintiff to collect discovery through a 21 Rule 69 examination of the parties or a Nebbia hearing regarding the source of the funds alleged 22 by the defendant to have been provided the funds for the cash bond, it is very probable the record 23 would be clarified to such an extent factual stipulations could be achieved. If stipulations could 24 not be obtained, the record would be developed to such an extent the issue would be ripe for 25 summary judgment and the determination of the proper party entitled to receive the funds, pursuant 26 to United States v. Rubenstein, supra. The family members should welcome the opportunity to 27 provide discovery if they actually have financial records to support their affidavits. 28 5

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SUMMARY Counsel for defendant has failed to submit persuasive evidence which establishes the source

3 of the $100,000 provided as a cash bond to secure release of the defendant. Upon this record the 4 United States would be entitled to satisfy the judgment. Rather than seek the immediate entry of 5 an order applying these funds to the satisfaction of the judgment, plaintiff urges the Court to allow 6 the parties to conduct a Fed.R.Civ.P. 69(a) proceeding. Conducting discovery pursuant to this 7 process is very likely to identify the source of the funds and to determine how much, if any, of the 8 funds should be applied to the satisfaction of the judgment of defendant. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 s/Reid C. Pixler REID C. PIXLER Assistant U.S. Attorney DIANE J. HUMETEWA United States Attorney District of Arizona Respectfully submitted this 30 th day of May, 2008.

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CERTIFICATE OF SERVICE

I hereby certify that on May 30, 2008, 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 3 Filing to the following CM/ECF registrant: 4 Jilbert Tahmazian 5 LAW OFFICES OF JILBERT TAHMAZIAN 1518 W. Glenoaks Boulevard 6 Glendale, California 91201 [email protected] 7 8 By: s/Amber M. Almon Amber M. Almon 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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