Tossas-Castro et al v. Merced-Torres et al

Filing 37

MEMORANDUM AND ORDER re: 33 Motion for Intervention of Right Pursuant to Rule 24 of the Federal Rules of Civil Procedure and to Vacate Order at Docket No. 26. The United States's motion to intervene is GRANTED. The Clerk shall VACATE the writ of execution, Docket No. 26, to the extent that it authorizes execution against the United States or its instrumentalities. Signed by US Magistrate Judge Silvia Carreno-Coll on 7/13/2015.(NBB)

IN THE UNITED STATES COURT
FOR THE DISTRICT OF PUERTO RICO

ELIU TOSSAS-CASTRO, ET AL.,
Plaintiffs,
v.

CIV. NO.: 14-1419(GAG/SCC)

MIGUEL A. MERCED-TORRES,
ET AL.,
Defendants.

MEMORANDUM AND ORDER
In April 2014, Defendant Miguel A. Merced-Torres was
indicted on numerous counts of wire fraud and identity theft.
Crim. No. 14-293(JAG), Docket No. 3. In September 2014,
Merced pled guilty, and as part of his plea agreement, Merced
agreed to forfeit a substantial amount of personal property,
several vehicles, and certain real property. Crim. No. 14-293,
Docket No. 41. The Court granted a preliminary order of
forfeiture with regard to that property, Crim. No. 14-293,
Docket No. 61, and the Court sentenced Merced pursuant to

TOSSAS-CASTRO v. MERCED-TORRES

Page 2

the plea agreement, Crim. No. 14-293, Docket No. 116. The
forfeited property was named in the judgment against Merced.
Id. at 7–8. As part of its judgment, moreover, the Court
explained that a judgment of restitution would be entered at a
later date. Id. at 5.
After Merced pled guilty, Plaintiffs Eliu Tossas-Castro,
Esteban Tossas-Castro, and Norman Colón-Córdova, sued
Merced and others. Docket No. 1. Plaintiffs alleged that they
had been victims of one of Merced’s fraudulent schemes and
sought damages. Id. None of the defendants answered Plaintiffs’ suit, and the Clerk entered default. Docket No. 7. After a
default damages hearing, a magistrate judge recommended
that judgment be entered in favor of the plaintiffs in the total
amount of $1,648,500. Docket No. 21, at 10. The presiding
district judge adopted the magistrate’s recommendation,
Docket No. 22, and judgment was entered accordingly, Docket
No. 23. Plaintiffs then sought to execute the judgment in their
favor. Among other things, they sought to execute as to any
cash or property belonging to the defendants and held by the
FBI or the Secret Service. Docket No. 24, at 3. The presiding
district judge granted Plaintiffs’ motion, Docket No. 25, and a
writ of execution issued, Docket No. 26.

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Now, the Government has appeared seeking to intervene
in this case and asking the Court to vacate its execution order.
Docket No. 33. In essence, the Government takes the position
that the property it holds that relates to Merced is subject to
forfeiture proceedings, and title has vested in the United States;
thus, the plaintiffs cannot recover that property to satisfy their
judgment against Merced. Id. The plaintiffs have not opposed
the Government’s motion; the plaintiffs have thus waived their
objections. Loc. Civ. R. 7(b). For the reasons I explain below, I
permit the Government to intervene and vacate the execution
order.
The Government seeks intervention as of right pursuant to
Federal Rule of Civil Procedure 24(a)(2), or, in the alternative,
permissive intervention pursuant to Rule 24(b). The Government does not explain why either of these provisions apply, but
it is obvious enough. Rule 24(a)(2) gives a party a right to
intervene if it “claims an interest relating to the property . . .
that is the subject of the action,” such that adjudicating the
action without the party’s presence might “as a practical matter
impair or impede the movant’s ability to protect its interest.”
Here, of course, the Government claims to be the owner of the
property targeted by the execution order. Intervention under

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Rule 24(a)(2) is thus appropriate and is allowed. See AlejandroOrtiz v. P.R. Elec. Power Auth., Civ. No. 10-1320(SCC), 2014 WL
4260672, at *1–3 (D.P.R. Aug. 28, 2014) (permitting intervention
as of right to challenge the distribution of judgment funds).
The property the Government seized from Merced was
forfeitable pursuant to 18 U.S.C. § 981(c)(1)(C), and, pursuant
to 28 U.S.C. § 2461(c), it was ordered forfeited in the criminal
judgment against Merced. Thus, the property is no longer
Merced’s; it is the Government’s, retroactive to the time of the
offense giving rise to the forfeiture. 18 U.S.C. § 981(f) (“All
right, title, and interest in property . . . shall vest in the United
States upon commission of the act giving rise to forfeiture . . . .).
If the plaintiffs wish to claim an interest in Merced’s forfeited
property, they must follow the procedures set forth in 21
U.S.C. § 853(n)(2) and Federal Rule of Criminal Procedure
32.2(c).1 If they wish to seek restitution out of the forfeited

1.

As the Government points out, however, Docket No. 33, at 5, the
plaintiffs may not be able to assert an interest in Merced’s forfeited
property, as they are general, unsecured creditors who cannot
challenge the underlying forfeiture. See United States v. Eldick, 223 F.
App’x 837, 839–40 (11th Cir. 2007). But see United States v. Emor, 785
F.3d 671, 678–79 (D.C. Cir. 2015) (“Congress designed criminal
forfeiture to punish criminal defendants, not crime victims, and clearly
did not contemplate section 853(c) being used to defeat a victim’s

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property, they must seek mitigation or remission pursuant to
21 U.S.C. § 853(i)(1).
For these, I GRANT the United States’s unopposed motion
to intervene as of right, and I VACATE the Court’s writ of
execution, Docket No. 26, to the extent that it authorizes
execution against the United States or its instrumentalities.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 13th day of July, 2015.
S/ SILVIA CARREÑO-COLL
UNITED STATES MAGISTRATE JUDGE

property interest.”). In any case, using a separate lawsuit as a vehicle
to secure all of Merced’s forfeited assets would prejudice Merced’s
other victims, who likewise deserve restitution. Cf. United States v.
Frykholm, 362 F.3d 413, 417 (7th Cir. 2004) (“Costwold cannot enjoy any
priority over the other victims and cannot reap a profit while
Frykholm’s other creditors go begging.”).