United States v. Romano

• Court: Court of Appeals for the Second Circuit
• Decided: October 16, 2023
• Docket: 21-1209
• Status: Unpublished

Opinion

21-1209 (L) United States of America v. Romano

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals for the 2 Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 3 Foley Square, in the City of New York, on the 16th day of October, two thousand 4 twenty-three. 5 6 PRESENT: 7 DEBRA ANN LIVINGSTON, 8 Chief Judge, 9 BETH ROBINSON, 10 MARIA ARAÚJO KAHN, 11 Circuit Judges. 12 _____________________________________ 13 14 United States of America, 15 16 Appellee, 21-1209 (L), 21-1271 17 (Con), 21-2585 (Con), 18 v. 22-223 (Con), 22-701 19 (Con) * 20 21 Jason Mosca, AKA Stan, AKA Walter,

* 21-1209 (L) was withdrawn by order filed January 10, 2022. 1 AKA Jeff, AKA Jay, Jarret Stretch, AKA 2 John Murphy, Michael Scott Schutzman, 3 AKA Mike Scott, AKA Steve Burman, 4 AKA Dennis, AKA Josh Tyler, AKA Todd 5 Evans, 6 7 Defendants, 8 9 Michael Romano, William Kearney, 10 AKA Ed Thompson, AKA George, 11 12 Defendants-Appellants, 13 14 Karen Kearney, Jeanne Romano, 15 16 Movants-Appellants. 17 18 _____________________________________ 19 20 FOR APPELLEE: Kevin Trowel, Diane C. 21 Leonardo, Assistant 22 United States Attorneys, 23 for Breon Peace, United 24 States Attorney for the 25 Eastern District of New 26 York, Central Islip, NY. 27 28 FOR DEFENDANT-APPELLANT Michael Romano, pro se, 29 MICHAEL ROMANO: Fairton, NJ. 30 31 FOR DEFENDANT-APPELLANT William Kearney, pro se, 32 WILLIAM KEARNEY: Lindenhurst, NY. 33

2 1 FOR MOVANT-APPELLANT Karen S. Kearney, pro 2 KAREN KEARNEY: se, East Islip, NY. 3 FOR MOVANT-APPELLANT Matthew Gilmartin, 4 JEANNE ROMANO: North Olmsted, OH. 5 6

Appeal from a judgment and orders of the United States District Court for

the Eastern District of New York (Dora Irizarry, Judge; Vera M. Scanlon, Magistrate

Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the order of the district court on defendants’

forfeiture is AFFIRMED. It is further ORDERED that the district court orders for

third party petitions are VACATED and REMANDED.

William Kearney and Michael Romano, proceeding pro se, appeal the district

court’s order which adopted the magistrate judge’s report and recommendation

on forfeiture. Jeanne Romano, through counsel, and Karen Kearney, proceeding

pro se, separately appeal district court orders granting the Government’s motions

to dismiss their third-party forfeiture petitions under 21 U.S.C. § 853 in which they

claimed a legal interest in certain real property subject to forfeiture. We assume

3 the parties’ familiarity with the underlying facts and the issues on appeal, as well

as our prior decision on the initial direct appeal. See generally United States v.

Romano, 794 F.3d 317 (2d Cir. 2015).

I. Mail and Wire Fraud Conspiracy Forfeiture

In a forfeiture context, we review the district court’s legal conclusions de

novo and its factual findings for clear error. United States v. Daugerdas, 892 F.3d

545, 552 (2d Cir. 2018).

The appellants’ main argument is that the district court incorrectly ordered

gross-proceeds forfeiture under 18 U.S.C. § 981(a)(2)(A) instead of net-proceeds

forfeiture under 18 U.S.C. § 981(a)(2)(B). “[C]ases involving illegal goods, illegal

services, unlawful activities, and telemarketing and health care fraud schemes,”

trigger subsection (A) whereas “cases involving lawful goods or lawful services

that are sold or provided in an illegal manner” are covered by subsection (B). The

Defendants rely on cases finding a clear distinction between subsection (A), which

is appropriate for cases involving inherently unlawful activities, and subsection

(B), which is generally appropriate in cases in which lawful goods or services were

sold or provided in an unlawful manner. See United States v. Bodouva, 853 F.3d 76, 4 79–80 (2d Cir. 2017) (per curiam). Because the scheme in this case involved the

sale of gold coins—a lawful good—the Defendants argue that subsection (B)

applies. We disagree.

The cases relied on by the Defendants do not address the key language in

subsection (A): cases “involving . . . telemarketing . . . schemes.” The conduct for

which the defendants were convicted was not generic “illegal services [or]

unlawful activities,” but rather a kind of conduct specifically enumerated in

subsection (A). The district court did not err when it found that William Kearney

and Michael Romano engaged in a telemarketing scheme. Accordingly, since the

conduct in question fell within the specific language of subsection (A), we affirm

the district court’s order of gross proceeds forfeiture. 1

II. Third-Party Claims

We also conclude that Karen Kearney and Jeanne Romano’s third-party

petitions were dismissed prematurely. Third party claims to assets seized at

1Therefore, we do not reach the district court’s holding that the forfeiture was also proper under 18 U.S.C. § 982 for property involved in the money laundering conspiracy for which defendants were convicted. 5 forfeiture are governed by 21 U.S.C. § 853 and Fed. R. Crim. P. 32.2(c). We apply

the normal rules of civil procedure to petitions under § 853 and consider them

under the familiar Fed. R. Civ. P. 12(b)(6) standard. Daugerdas, 892 F.3d at 552. To

survive a motion to dismiss, a petition “must contain sufficient factual matter,

accepted as true, to state a claim that is plausible on its face.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (internal quotation marks omitted).

To state a plausible claim under § 853(n)(6)(A), a third party must state that

she “has a legal right, title, or interest in the property” that “was vested in the

petitioner rather than the defendant or was superior to any right, title, or interest

of the defendant at the time of the commission of the acts which gave rise to the

forfeiture of the property.” 21 U.S.C. § 853(n)(6)(A). We have held that partial

forfeiture is possible when property interests of third parties are at stake. See

Pacheco v. Serendensky, 393 F.3d 348, 354–55 (2d Cir. 2004).

Karen Kearney and Jeanne Romano’s ownership interests at forfeiture are

determined by state law. See United States v. Watts, 786 F.3d 152, 161 (2d Cir. 2015).

With respect to Karen Kearney’s home, the district court presumed, without

deciding, that the Government obtained an interest superior to Karen Kearney’s 6 interest and the interest of her ex-husband, one of the defendants in this case. In

her counseled petition and pro se opposition to the Government’s motion, Karen

Kearney argued that she had a separate vested interest and a superior interest

under New York law.

In New York, married couples generally own their homes in a tenancy by

the entirety. See Citibank, N.A. as Tr. of NRZ Pass-Through Tr. VI v. Gifford, 168

N.Y.S. 3d 192, 195 (N.Y. App. Div. 2022); see also N.Y. EST. POWERS & TRUSTS LAW

§ 6-2.2(b) (McKinney 2019). A tenancy by the entirety may be converted into a

tenancy in common only under certain conditions, including by joint conveyance

or divorce, at which point a spouse will own their share as a tenant in common. In

re Est. of Violi, 65 N.Y.2d 392, 395 (1985). Karen Kearney divorced her husband in

September 2020. Under a tenancy-in-common, cotenants each possess an equal

right to enjoy the whole property. See Myers v. Bartholomew, 91 N.Y.2d 630, 632–33

(1998).

In the circumstances here, the mere fact that the property was bought in part

with tainted funds would not necessarily preclude Karen Kearney from plausibly

stating a superior ownership interest in her own share of the property under New 7 York law as either a tenant by the entirety or a tenant in common, whichever

applies. See, e.g., United States v. Bangiyeva, 75 F.4th 445, 456–58 (4th Cir. 2023)

(describing property rights of an innocent spouse who holds property in a tenancy

by the entirety). Under New York law, Karen Kearney plausibly asserted a claim

that she had a property interest that was vested in her rather than the defendant.

Binding case law does not preclude the plausibility of her claim. Accordingly, we

vacate and remand the order dismissing Karen Kearney’s third-party petition.

Jeanne Romano’s petition was also dismissed prematurely. Under Florida

law, a constructive trust is an equitable remedy that converts a title holder into a

trustee when property “has been acquired by fraud, or where, though acquired

originally without fraud it is against equity that it should be retained by him who

holds it.” Maio v. Clarke, 255 So.3d 369, 371 (Fla. Dist. Ct. App. 2018) (quoting

Provence v. Palm Beach Taverns, Inc., 676 So.2d 1022, 1025 (Fla Dist. Ct. App. 1996)).

“[C]ourts may impose a constructive trust where there is clear and convincing

proof of (1) a promise, express or implied, (2) transfer of the property and reliance

thereon, (3) a confidential relationship, and (4) unjust enrichment.” Bank of Am. v.

Bank of Salem, 48 So.3d 155, 158 (Fla. Dist. Ct. App. 2010) (internal quotation marks 8 and citation omitted).

Jeanne Romano filed a third-party petition asserting that she paid for her

home with the help of a 2003 mortgage and the approximately $143,000 in funds

that she received from her son as a loan for home improvements but that she

subsequently repaid. She asserts that she has continued to pay all expenses on the

property. Jeanne Romano later transferred the title, on the advice of counsel, to

Michael Romano in what counsel advised her to be a constructive trust. The

district court dismissed Jeanne Romano’s petition reasoning that she failed to state

plausibly an interest in the property, thus apparently discrediting the credibility

of these assertions. Accepting Jeanne Romano’s petition as true, as we must, she

plausibly stated the terms of a constructive trust under Florida law, including that

it would be “against equity” for Michael Romano to retain possession of the

property in order to satisfy part of his forfeiture. Silva v. de la Noval, 307 So.3d 131,

134 (Fla. Dist. Ct. App. 2020).

Jeanne Romano has also plausibly pleaded that she has a superior interest

in the property. Revised Final Order of Forfeiture, 1, February 18, 2022; Daugerdas,

892 F.3d at 548 (“[C]riminal forfeiture is an in personam action in which only the 9 defendant’s interest in the property may be forfeited.”) (citation omitted). If the

district court determines that Jeanne Romano has standing, the district court must

determine what interest Michael Romano had in the property under Florida law.

We therefore vacate and remand the order dismissing Jeanne Romano’s third-

party petition.

We have considered the parties’ remaining arguments and find them to be

without merit or unavailing. Accordingly, we AFFIRM the order of the district

court on defendants’ forfeiture, VACATE orders dismissing the third-party

petitions, and REMAND for further proceedings.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court