United States of America v. $541,395.06 United States Currency et al
Filing
85
DECISION AND ORDER granting 81 Motion to Strike 81 MOTION to Strike 43 Claim. Signed by Hon. Charles J. Siragusa on 8/20/12. (KAP)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
Plaintiff,
DECISION & ORDER
-vs10-CV-6555-CJS
$541,395.06 U.S. CURRENCY, et al.
Defendants.
APPEARANCES
For Plaintiff:
Grace M. Carducci, A.U.S.A.
United States Attorney’s Office
100 State Street, Fifth Floor
Rochester, New York 14614
For Defendant:
Joseph R. Amisano, Esq.
100 Meridian Centre Blvd Ste. 325
Rochester, New York 14618
INTRODUCTION
Siragusa, J. This case is before the Court on the Motion of The United States of
America (“the Government”) seeking to strike the claim of Joseph R. Amisano, Esq. (“the
claimant”). Applying the appropriate standard of law, the Court determines that the claimant
lacks standing in this matter and grants the Government’s application.
FACTUAL BACKGROUND
On September 28, 2010, the Government filed a Verified Complaint pursuant to 18
U.S.C. § 981 (a)(1)(A) and (a)(1)(C), seeking forfeiture of the proceeds of an alleged Ponzi
scheme conducted by the late Ashvin Zaveri, including: $543,395.06 of United States
currency; real property located at 7881 Hidden Oaks, Pittsford, New York; approximately
one hundred thousand dollars worth of seized jewelry; two William Penn Life Insurance
Company policies; and the rights, title, and interests in twenty-five of Zaveri’s business
partnerships. The Government asserts that the $543,395.06 in seized funds (“the
defendant currency”) represents proceeds of the alleged Ponzi scheme.
On June 15, 2010, the Government instructed Zaveri’s attorney, the claimant, to
take custody of the defendant currency alleging it represented fraudulent proceeds. The
claimant deposited the defendant currency into an M&T bank account in his own name.
Three days later, on June 18, 2010, the claimant, describing himself as Zaveri’s agent,
opened a commercial deposit account in Zaveri’s name for the purpose of holding the
defendant currency.
On October 7, 2010, the Court issued an Order for Issuance of Arrest Warrants in
Rem for the defendant currency. On November 2, 2010, the Court held a proceeding
regarding the Arrest Warrant in Rem and, the claimant alleges, on this date the Government caused the funds to be transferred out of his account with no notice to him and no
opportunity to be heard.
On December 1, 2010, the Court ordered the M&T Bank branch holding the
defendant currency to turn over the funds to the United States. On December 29, 2009,
the Government served a copy of the Arrest Warrant in Rem, a Notice of Forfeiture Action,
and Verified Complaint on the claimant. The Notice of Action stated
The person receiving direct notice of this action, who asserts an interest in
any of the defendant property may contest the forfeiture by filing a claim
(which must identify the specific property claimed, identify the claimant and
the claimant’s interest in the property, and be signed by the claimant under
penalty of perjury) in the United States District Court, Western District of New
York . . . by February 24, 2011, in accordance with Rule G(5) of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture
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Actions. Additionally, any claimant must serve and file an Answer to the
Complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure
within 21 days after filing the claim.
Aff. in Support of Not. to Strike Claim ¶ 6.
On February 24, 2011, the claimant filed a Verified Claim asserting an ownership
interest in the defendant currency as the signatory of the bank account from which it was
seized.1 In his Verified Claim, the claimant asserts he has a lien against Zaveri and the
defendant currency as a result of $154,600 in unpaid legal fees that accrued by the time
of Zaveri’s death. On March 18, 2011, twenty-two days after filing a Verified Claim, the
claimant filed an Answer, reasserting an alleged ownership interest in the defendant
currency.
On May 24, 2012, the Government filed a Notice of Motion, moving this Court to
strike Amisano’s claim, contending he lacks standing under Article III of the Constitution
and statutory standing under Rule G(8)(c) of the Supplemental Rules for Admiralty or
Maritime Claims and Asset Forfeiture Actions (“Forfeiture Rules”).
Written responses to the motion were due June 29, 2012, however the claimant filed
no written response. Oral arguments were held on August 16, 2012.
STANDARDS OF LAW
“In order to contest a governmental forfeiture action, claimants must have both
standing under the statute or statutes governing their claims and standing under Article III
of the Constitution as required for any action brought in federal court.” United States v.
1
On February 24, 2010, the claimant filed a second Verified Claim asserting an
ownership interest in the “Clinton County Kentucky leases.” ECF No. 43. However, the
claimant did not file an Answer or otherwise demonstrate an intent to move forward with
this claim. The Government does not address this claim in its Motion to Strike.
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Cambio Exact, S.A., 166 F.3d 522, 526 (2d Cir. 1999). Article III standing relates to the
claimant’s ability to demonstrate an interest in the seized property that is sufficient to
satisfy the case or controversy requirement of Article III.2 United States v. 8 Gilcrease
Lane, 641 F. Supp. 2d 1, 5 (D. D.C. 2009), citing Stefan D. Cassella, Asset Forfeiture Law
in the United States, § 9-4 at 326 (2007). Statutory standing relates to a claimant’s ability
to demonstrate compliance with the statutory and procedural requirements imposed by
Congress. Id.
A. Article III Standing
To demonstrate Article III standing, the claimant must allege “a distinct and palpable
injury to himself that is the direct result of the putatively illegal conduct of the adverse party
and likely to be redressed by the requested relief.” Cambio Exact, S.A., 166 F.3d at 526.
In civil forfeiture actions, the injury generally derives from a demonstration that an innocent
third party has an ownership or possessory interest in the property that has been seized.
See Id. A claimant may offer proof of an ownership interest by demonstrating “actual
possession, dominion, control, title, or financial stake” in the specific forfeited property.
2
Article III, Section 2 of the Constitution provides as follows:
The judicial Power shall extend to all Cases, in Law and Equity, arising
under this Constitution, the Laws of the United States, and Treaties made,
or which shall be made, under their Authority;—to all Cases affecting
Ambassadors, other public Ministers and Consuls;—to all Cases of
admiralty and maritime Jurisdiction;—to Controversies to which the United
States shall be a Party;—to Controversies between two or more
States;—between a State and Citizens of another State;—between
Citizens of different States;—between Citizens of the same State claiming
Lands under Grants of different States, and between a State, or the
Citizens thereof, and foreign States, Citizens or Subjects.
4
United States v. Contents of Account Numbers 208–06070 and 208–06068–1–2, 847 F.
Supp. 329, 333 (S.D.N.Y. 1994); see also United States v. Collucio, 51 F.3d 337, 339 (2d
Cir. 1995).
While ownership may provide evidence of standing, there must also be an injury.
Cambio Exacto, S.A. 166 F.3d at 527 (noting “we have, for example, denied standing to
‘straw’ owners who do indeed ‘own’ the property, but hold title to it for somebody else.
Such owners do not themselves suffer an injury when the property is taken.”).
State law determines whether the property interest in a seized property is sufficient
to establish standing. United States v. One 2004 Land Rover Range Rover, VIN:
SALME11464A175730 seized from Douglas Turnage, No. 07-CV-818S, 2009 WL 909669
(W.D.N.Y. Mar. 31, 2009) aff'd sub nom. United States v. One 2004 Land Rover Range
Rover, 369 F. App’x 208 (2d Cir. 2010). Here, the defendant currency was located in New
York, so New York law defines the contours of the property right.
Under New York law, bank depositors generally do not retain ownership of funds
they deposit. See, e.g., Peoples Westchester Sav. Bank v. Fed. Deposit Ins. Corp., 961
F.2d 327, 331 (2d Cir. 1992) (distinguishing general accounts, where the depositor does
not retain ownership rights in the specific deposited funds, from “special” accounts); United
States v. Ribadeneira, 920 F.Supp.553, 555 (S.D.N.Y. 1996) (finding holders of general
bank accounts “can have no interest in particular assets forfeited” and therefore no
standing to contest forfeiture “unless they have already secured a judgment . . . against a
particular item”).
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Only in exceptional cases where depositors open a “special” account do they retain
ownership rights in their deposits and standing to challenge the forfeiture of those deposits.
Id. Whether an account is “special” depends upon the mutual intent of the parties. Peoples
Westchester Sav. Bank, 961 F.2d at 331. Absent evidence of mutual intent to create a
“special” account wherein the depositor retains ownership, New York law presumes that
deposits are not “special.” Id. This principle applies to both attorneys and members of the
general public. See id. at 332 (finding an attorney’s interest on lawyer account (IOLA) was
a general account because there was no evidence of mutual intent to create a “special”
account).
To demonstrate Article III standing, a claimant must do more than demonstrate that
he or she was owed money. Rather, the claimant must demonstrate a specific ownership
interest in the defendant currency. Where the defendant currency is bank funds, the
claimant must also rebut the strong presumption that he or she deposited the funds in a
“general” account thereby relinquishing any specific ownership interest in the funds. See
Id.
B. Statutory Standing
To demonstrate statutory standing, a civil forfeiture claimant must demonstrate
compliance with the statutory requirements imposed by Congress in the Supplemental
Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (“Forfeiture Rules”).
Where a claimant fails to comply with the deadlines provided by the Forfeiture Rules, his
claim may be stricken for lack of statutory standing. See United States v. $27,601.00 U.S.
Currency, 800 F. Supp. 2d 465, 467 (W.D.N.Y. 2011); see also, Cambio Exacto, S.A. 166
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F.3d at 526 (finding a claimant who fails to meet deadlines provided by Forfeiture Rules
lacks statutory standing).
Courts routinely strike claims in federal forfeiture actions where a claimant fails to
comply with the deadlines provided by the Forfeiture Rules. See United States v. Cambio
Exacto, S.A., 166 F.3d at 527. However, a court has the discretion to excuse a missed
deadline if the claimant can show “excusable neglect.” United States v. One 1978 Piper
Navajo Aircraft, 748 F.2d 316, 318 (5th Cir.1984).
In Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380
(1993), the Supreme Court held that, “Congress plainly contemplated that the courts would
be permitted, where appropriate, to accept late filings caused by inadvertence, mistake,
or carelessness, as well as by intervening circumstances beyond the party's control.”
Pioneer, 507 U.S. at 388. The Court went on to state, “[b]ecause Congress has provided
no other guideposts for determining what sorts of neglect will be considered ‘excusable,’
we conclude that the determination is at bottom an equitable one, taking account of all
relevant circumstances surrounding the party's omission.” Id. at 395. An analysis of
excusable neglect requires the Court to examine four factors including: the danger of
prejudice to the non-movant, the length of the delay and its impact on proceedings, the
reason for the delay including whether it was within the reasonable control of the movant,
and whether the movant acted in good faith. Id.
The Second Circuit focuses particularly on the reason for the delay, noting that “the
equities will rarely if ever favor a party who “‘fail[s] to follow the clear dictates of a court rule’
and . . . where ‘the rule is entirely clear, we continue to expect that a party claiming
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excusable neglect will, in the ordinary course, lose under the Pioneer test.’” Silivanch v.
Celebrity Cruises, Inc., 333 F.3d 355, 366-67 (2d Cir. 2003) (quoting Canfield v. Van Atta
Buick/GMC Truck, 127 F.3d 248, 251 (2d Cir. 1997), cert. den. 522 U.S. 1117 (1998)).
ANALYSIS
A. Article III Standing
Applying the appropriate standard of law, the Court determines that the claimant has
not demonstrated Article III standing in this matter. The claimant has failed to offer
evidence of a specific ownership interest in the defendant currency or evidence of a
perfected lien attached to the defendant currency. Additionally, the claimant has failed to
show a mutual agreement with M&T Bank that the claimant would retain ownership of the
deposited funds. See Peoples Westchester Sav. Bank, 961 F.2d at 331. Further, the
claimant has failed to show dominion over the funds. See United States v. Contents of
Account Numbers 208–06070 and 208–06068–1–2, 847 F. Supp. 329, 333 (S.D.N.Y.
1994). According to M&T Bank’s Answer ¶ 58, Dec. 8, 2010, ECF No. 14:
The Subject Account was restrained under New York state law by service of
judgment enforcement devices that forbid their recipients from transferring
any portion of the Subject Account. The same judgment enforcement
devices also subject their recipients to penalties provided by New York state
law if those funds are transferred or conveyed in contravention of the
restraints.
The Court concludes that the claimant is a general unsecured creditor having no
specific ownership interest in the defendant currency. See United States v. Ribadeneira,
105 F.3d 833, 837 (2d Cir. 1997); United States v. Schwimmer, 968 F.2d 1570, 1581 (2d
Cir. 1992).
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B. Statutory Standing
On December 29, 2009, the Government served a copy of the Notice of Forfeiture
Action on the claimant. The Notice of Action clearly set out the deadlines and requirements
of the Forfeiture Rules:
The person receiving direct notice of this action, who asserts an interest in
any of the defendant property may contest the forfeiture by filing a claim
(which must identify the specific property claimed, identify the claimant and
the claimant’s interest in the property, and be signed by the claimant under
penalty of perjury) in the United States District Court, Western District of New
York . . . by February 24, 2011, in accordance with Rule G(5) of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture
Actions. Additionally, any claimant must serve and file an Answer to the
Complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure
within 21 days after filing the claim.
Not. of Forfeiture Action, Ex. 1-4.
On February 24, 2011, the claimant timely filed a Verified Claim in which he
asserted an ownership interest in the defendant currency. Thereafter, the claimant had
twenty-one days to file an answer. He filed his answer twenty-two days later on March 18,
2011.
On May 24, 2012, the Government filed a Notice of Motion and Motion to Strike
Claim, contending that the claimant lacks statutory and Article III standing. In its motion,
the Government contended that the claimant has yet to file an answer regarding his claim
to the defendant currency. The docket demonstrates that the claimant’s answer was filed,
albeit a day after the deadline provided by Rule G of the Forfeiture Rules. Additionally, the
docket demonstrates that the claimant failed to attach a certificate of service to his answer
or otherwise demonstrate proof of service of his answer on the Government. See ECF No.
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56.3 In any event, the record demonstrates that the claimant filed an answer in regards to
the defendant currency, but it was untimely pursuant to Rule G of the Forfeiture Rules.
The claimant has failed to provide the Court with an explanation of mitigating factors
which can excuse a late filing, such as a good faith attempt to file on time, detrimental
reliance on government misinformation, or the expenditure of considerable time preparing
for trial. See United States v. $1,437.00 U.S. Currency, 242 F. Supp. 2d 193, 195
(W.D.N.Y. 2002). The Court therefore concludes that the claimant lacks both statutory and
Article III standing in this matter.
CONCLUSION
The Government’s Motion, ECF No. 81, seeking an Order striking the claim of
Joseph R. Amisano, Esq., is granted.
IT IS SO ORDERED.
Dated: August 20, 2012
Rochester, New York
ENTER:
/s/ Charles J. Siragusa
CHARLES J. SIRAGUSA
United States District Judge
3
The Government’s confusion in regards to the answer could be due to lack of
service. It could also perhaps be explained by error in confusing claims filed by the
claimant. In addition to filing a Verified Claim for the defendant currency, the claimant
also originally filed a second Verified Claim asserting an ownership interest in the
Clinton County Kentucky leases. See ECF No. 43. The claimant failed to file an answer
in respect to the Clinton County Kentucky leases. The Government ignores this claim in
its entirety in its Notice of Motion and Motion to Strike Claim.
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