United States v. Peter Monsanto

852 F.2d 1400, 1988 U.S. App. LEXIS 9222, 1988 WL 77113

Opinions

PER CURIAM:

This is an appeal from an order of the United States District Court for the Southern District of New York, Robert J. Ward, J., denying a motion to vacate or modify an ex parte post-indictment restraining order entered pursuant to a provision of the Comprehensive Forfeiture Act of 1984 (CFA), 21 U.S.C. § 853(e)(1)(A) and for a declaration that fees paid to appellant’s defense counsel would be exempt from post-conviction forfeiture pursuant to the “relation back” provision of the CFA, 21 U.S.C. § 853(c). The appeal was originally heard by a panel of the court, 836 F.2d 74 (2d Cir.1987), and has been reheard in banc.

The relevant facts of this case, which are described in greater detail in the panel opinion, are as follows. In an indictment unsealed in July 1987, Peter Monsanto was indicted on various RICO, narcotics, continuing criminal enterprise and firearms charges. The indictment specified two parcels of residential real property, valued at $335,000 and $30,000, as well as $35,000 in cash, as “constituting and derived from the proceeds” of violations of Title III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. § 801 et seq., and thus subject to forfeiture pursuant to 21 U.S.C. § 853(a). The district court entered an ex parte restraining order pursuant to 21 U.S.C. § 853(e)(1)(A) prohibiting Monsanto from transferring or encumbering the residential properties.

In August 1987, Monsanto moved to vacate or modify the restraining order, seeking use of the restrained assets to retain private trial counsel and a declaration that fees paid to such counsel would be exempt from post-trial forfeiture. He argued that Congress did not intend the CFA to apply to property needed to pay legitimate attorney’s fees and that if the statute did apply to such property it would violate his sixth amendment right to counsel of choice. He challenged not only the post-indictment restraint provision, 21 U.S.C. § 853(e)(1)(A), but also the post-conviction “relation back” provision, 21 U.S.C. § 853(c), which allows the government to seek post-conviction forfeiture of property transferred to third persons, unless such persons establish that they were bona fide purchasers for value who at the time of the purchase were reasonably without cause to believe that the property was subject to forfeiture.

The district court refused to vacate the restraining order, although it acknowledged that the effect of the order was to render Monsanto indigent. The court ruled that it was not prepared to find the forfeiture provisions of the CFA unconstitutional as applied to attorney’s fees and that Congress did not intend to exempt such fees from application of the statute. It also denied Monsanto’s request for a declaration that fees paid to defense counsel would be exempt from post-conviction forfeiture. The court indicated, however, that it would allow invasion of the forfeitable assets to pay Monsanto’s counsel of choice to the extent of the rates established by the Criminal Justice Act, 18 U.S.C. § 3006A (CJA).

Monsanto brought an expedited appeal and a panel of this court issued an opinion in December 1987, with one judge dissenting. 836 F.2d 74 (2d Cir.1987). The panel concluded that the post-indictment restraint and post-conviction forfeiture provisions of the CFA can apply to funds needed to pay legitimate attorney’s fees. The panel held, however, that notice and a pre-trial hearing — at which the government has the burden of demonstrating the likelihood that the assets the government seeks to restrain are forfeitable — are constitutionally required for the government to restrain assets needed to pay a defendant’s counsel of choice. The panel held that where the government fails to meet such a burden any funds used to pay legitimate attorney’s fees would be exempt from post-trial forfeiture. 836 F.2d at 84.

The case was remanded and the district court held a hearing as required by the panel opinion. Following the hearing, the district court ruled that the government had met its burden of demonstrating the likelihood that the restrained assets were forfeitable and that the restraining order therefore need not be lifted. Monsanto’s trial commenced in February 1988 and is still in progress in the district court. We are told that at trial Monsanto is represented by counsel appointed under the CJA.

In January 1988, this court voted to rehear the appeal in banc, and we heard oral argument on March 30, 1988. As is indicated by the separate concurring opinions, a majority of the members of the in banc court, albeit for varying reasons, agree that the order of the district court denying Monsanto’s motion should be vacated and the case remanded with instructions to modify the restraining order to permit Monsanto access to restrained assets to the extent necessary to pay legitimate (that is, non-sham) attorney’s fees in connection with the criminal charges against him. A majority of the members of the court also agree that any such fees paid to Monsanto’s defense counsel are exempt from subsequent forfeiture pursuant to 21 U.S.C. § 853(c).

The order of the district court is vacated and the matter is remanded to the district court for further proceedings consistent with this opinion.