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UNITED STATES v. ALL FUNDS & OTHER PROP. CONTAINED

October 16, 1986

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL FUNDS AND OTHER PROPERTY CONTAINED IN ACCOUNT NUMBER 031-217362 IN THE NAME OF ROGELIO CESPEDES, ACCOUNT NUMBER 031-504641 IN THE NAME OF ROGELIO CESPEDES AND ACCOUNT NUMBER 400543515, ACCOUNT HOLDER UNKNOWN, AT Chemical Bank 20 Pine Street New York, New York, Defendants-In-Rem



The opinion of the court was delivered by: CARTER

ROBERT L. CARTER, District Judge

 Plaintiff United States of America moves pursuant to Rule 56, F.R. Civ. P. for summary judgment in the above-captioned actions. These actions arise out of a criminal investigation into a narcotics-related money laundering operation that ultimately resulted in the conviction of four defendants. At the time those defendants were arrested, the government seized the funds now in dispute as well as other funds and property, and commenced a total of twelve civil actions in this district pursuant to 21 U.S.C. ยง 881(a). *fn1" The court is now called upon to decide whether a trial is necessary to determine the ultimate destination of the funds that found their way into this court.

 BACKGROUND

 In the original criminal proceeding, four defendants, Eduardo Orozco-Prada ("Orozco"), Humberto Orozco-Prada, Paul Farand, and Mahlon Clark were found guilty of violating a variety of drug, tax and financial reporting statutes. Most important for our purposes today was their participation in a money laundering operation that laundered more than $ 150 million over a four year period. See United States v. Orozco-Prada, 732 F.2d 1076, 1078-79 (2d Cir.), cert. denied, 469 U.S. 845, 105 S. Ct. 154, 83 L. Ed. 2d 92 (1984).

 As established at trial, the laundering operation was conducted under the auspices of an organization headed by Orozco called Cirex International ("Cirex"). The government investigation revealed that Cirex received large amounts of cash, much of it small bills transported in suitcases, which it deposited into bank accounts maintained in Orozco's name or in the names of other individuals and corporations. Cirex took a commission for counting and re-routing the money. Id. at 1081.

 The trial revealed a substantial connection between the money Cirex laundered and drug trafficking. Indeed, in order to affirm Orozco's conviction on Count I of the indictment, the Second Circuit had to find, as it did, that there was sufficient evidence linking Cirex to drug transactions, and that Orozco himself was a member of a conspiracy to aid and abet the distribution of narcotics. Id.2

 That evidence, the court found, came from a number of sources. First, Orozco himself confided to an undercover agent posing as a bank officer that 60 to 70 percent of the money that came through Cirex came from drug transactions. Id. at 1082 n.1. A similar admission was made by Orozco and a confederate to an investigator they had hired to transport a half a million dollars in cash three to five times a week from Miami to New York. When the investigator mentioned that money in such quantities had to derive from drug trafficking, they did not try to convince him otherwise. Trial Transcript at 554; see also 732 F.2d at 1082.

 There was significant additional evidence introduced at trial linking Cirex to the drug trade. For our purposes, only one additional incident requires any mention: In March of 1981, $ 270,000 in cash was brought to Cirex and credited to the account of one "Phillips," who turned out to be defendant Paul Forand. Trial Transcript at 623, 1040. The money was then deposited in an account at Deak-Perera. Orozco directed Deak-Perera to transfer the money to a shipbuilder in Alabama as payment for a shrimp fishing vessel that was subsequently stripped of its fishing gear. Trial Transcript at 1976-77. In May, 1981 defendant Clark was captaining the boat when it was stopped off the coast of Columbia with a cargo hold full of marijuana. Trial Transcript at 2820. A slip of paper with three Bogota phone numbers was found on Clark and on the ship when he was apprehended. Those same three numbers were found in Orozco's office at Cirex following his arrest.

 The six consolidated actions before the court concern money the government seized in nine bank accounts as well as $ 22,110.00 in cash seized at Cirex headquarters. One account is held by Orozco. Four accounts are in the name of Cirex. Another account is in the name Global Bay Commerce, a Panamanian company that Orozco used as a receptacle of cash. *fn3" Three of the accounts are held by Rogelio Cespedes, a criminal defendant who pleaded guilty and, in his testimony for the government at trial, relayed how he allowed Orozco to channel money through his (Cespedes') bank accounts and acted as a nominee for an Orozco account. Trial Transcript at 1327-1579.

 Four claimants contest the government's right to the seized funds. Cirex filed a claim of lien to the three Cespedes accounts (83 Civ. 0354), *fn4" its own account at the Bank of North America (83 Civ. 0369), two accounts in its name at Chase Manhattan Bank (83 Civ. 0372), *fn5" and the $ 22,110.00 in cash seized at its offices.

 Global Bay filed a claim of lien to the account in its name at Bankers Trust (83 Civ. 0373).

 Orozco filed a claim to an account in his name at Irving Trust (83 Civ. 0375).

 Harvey Reich as receiver of the assets of Cirex *fn6" has filed a claim of lien to two accounts in Cespedes' name at Chemical Bank (83 Civ. 0354), the two Cirex accounts at the Bank of North America (83 ...


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