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UNITED STATES v. BADALAMENTI

July 10, 1985;

UNITED STATES OF AMERICA,
v.
BADALAMENTI, et al., Defendants; In Re Subpoena Served on IVAN FISHER, ESQ.



The opinion of the court was delivered by: LEVAL

AMENDED OPINION AND ORDER

PIERRE N. LEVAL, U.S.D.J.

 Ivan Fisher, Esq., attorney for the defendant Salvatore Catalano, moves to quash a trial subpoena duces tecum served on him under Rule 17(c) by the Government. Defendant Datalano joins in the motion. The motion also is supported by amicus briefs of the National Association of Criminal Defense Lawyers and the New York Criminal Bar Association.

 The subpoena commands that Mr. Fisher "testify . . . and produce . . . all documents . . . relating to" his fee arrangement with Catalano. *fn1"

 The movants oppose the subpoena on numberous grounds including that it violates (i) rule 17(c); (ii) the attorney-client privilege; (iii) the defendant's Sixth Amendment right to counsel; (iv) the defendant's privilege against self incrimination; (v) Mr. Fisher's privilege against self incrimination; and (vi) the defendant's right to redress a grievance under the First Amendment.

 The Government argues that the subpoena violates none of the asserted privileges or rights and that it seeks proper evidence of Catalano's commission of the crimes charged by showing the element of "substantial income" derived from a "continuing criminal enterprise," ("CCE"), 21 U.S.C. § 848(2)(B) and from a "pattern of racketeering activity" ("RICO"), 18 U.S.C. § 1962. The Government contends it has reason to believe that Mr. Fisher's fee is in the vicinity of $500,000 and that the evidence of catalano's possession of such a sum to pay his attorney is proof of his revenues from narcotics trafficking. The Government has further asserted it may seek to seize those funds from Mr. Fisher under the provisions of the two statutes for forfeiture of the proceeds of such criminal activity, even after transfer to another person. 21 U.S.C. § 853(a), (c) and (n)(1)-(7), and 18 U.S.C. § 1963(a), (c) and (n)(1)-(7).

 The issue of possible forfeiture of the attorney's fees arises as to both trial evidence, by which the Government may seek "a special verdict of forfeiture," 18 U.S.C. § 1963(c), 21 U.S.C. § 853(c), and to post-trial proceedings disputing the attorney's right to exemption from such forfeiture as a "bona fide purchaser for value . . . without cause to believe that the property was subject to forfeiture." 21 U.S.C. § 853(n)(6)(B) and 18 U.S.C. § 1963 (m)(6)(B).

 Forfeiture

 In my view the Government's position as to the liability of Mr. Fisher's legal fee to forfeiture is not well taken and cannot serve as a basis to sustain the subpoena. I acknowledge that a literal reading of the two forfeiture status would seem to encompass the legal fee. But the liability to forfeiture of bona fide legal fees paid to the indicted defendant's trial attorney would raise such constitutional and ethical problems, I cannot conceive that this was intended by Congress, absent some indication in statute or legislative history. And if it had been intended, such application would in all likelihood violate the Sixth Amendment.

 The two provisions enacted in the Comprehensive Forfeiture Act of 1984, Pub.L. No. 98-473, Title II, §§ 302, 303, 2301, 98 Stat. 2040, 2044, 2192, 2193, state that the "right, title, and interest in [the] property [subject to forfeiture] vests in the United States upon the commission of the act giving rise to forfeiture" and that "such property . . . subsequently transfered to [another] person [may be forfeited] unless the transferee establishes . . . that he is a bona fide purchaser for value . . . who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture. . . ." 18 U.S.C. § 1963(c), 21 U.S.C. § 853(c).

 The statute is apparently intended to dissuade the commercial world from dealing with racketeers and traffickers, warning that one who accepts dirty money in payment for goods or services may forfeit it. To the jeweler, for example, the statute says "Don't sell diamonds to a racketeer. You may lose the proceeds."

 No one is more on notice of likelihood that the money may come from such prohibited activity than the lawyer who is asked to represent the defendant in the trial of the indictment. If the statute applies to him, its message to him is "Do not represent this defendant or you will lose your fee." That being the kind of message lawyers are likely to take seriously, the defendant will find it difficult or impossible to secure representation. By the Sixth Amendment we guarantee the defendant the right of counsel, but by the forfeiture provisions of the RICO and CCE statute (if they apply to the fee of the defense attorney), we insure that no lawyer will accept the business. (I note in addition that the RICO and CCE indictments to which the forfeiture provisions apply are generally big cases requiring months to prepare and try, making it all the less likely that the attorney might take a chance on escaping forfeiture.)

 That is only the beginning of the problems such construction of the statute would raise. A lawyer who was so foolish, ignorant, beholden or idealistic as to take the business would find himself in inevitable positions of conflict. His obligation to be well informed on the subject of his client's case would conflict with his interest in not learning facts that would endanger his fee by telling him his fee was the proceeds of illegal activity. If he made efforts to fight the forfeiture claiming he was "reasonably without cause to believe that the property was subject to forfeiture," the evidence on this issue would consist primarily of privileged matter confided to him by his client. He might furthermore be found to have accepted a contingent fee in a criminal case in violation of DR 2-106(c), since his retention of his fee would depend on gaining an acquittal in the client's trial. The statute would give attorneys a motive to negotiate a guilty plea that did not involve forfeiture, rather than fight the case expending valuable time and increasing the risk of incurring forfeiture.

 The question whether these statutes reach the defense attorney's fee was considered by the District Court for Colorado which, reviewing the scant legislative history and the rushed passage of the Comprehensive Forfeiture Act, concluded that the Act was not intended to, and did not, cover the attorney's bona bide fee for the defense ...


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