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U.S. v. GELB

December 24, 1991


The opinion of the court was delivered by: Platt, Chief Judge.


Defendants have moved on various grounds for summary judgment. For the reasons stated below, defendants' motion is denied in its entirety.


This civil action stems from a criminal case*fn1 brought against defendants Bernard Gelb and EDP Medical Computer Systems, Inc. ("EDP"). A grand jury returned a superseding indictment on July 16, 1987, naming as defendants Bernard Gelb and EDP. The central charge was that Bernard Gelb had violated the Racketeer Influenced and Corrupt Organizations Act by conducting (through EDP) a pattern of racketeering activity from about 1975 to about 1985; to wit: falsification of postage.

After a jury trial, the defendant Bernard Gelb ("Gelb") was convicted of one count of violating RICO, 18 U.S.C. § 1962(c) and 1963; one count of mail fraud, 18 U.S.C. § 1341; 50 counts of bribery, 18 U.S.C. § 201(b)(1)(C); and three counts of signing false corporate income tax returns, 26 U.S.C. § 7206(1). Defendant EDP was acquitted on all charges. A judgment of conviction was entered on January 13, 1989, in the amount of $5,101,000. This amount consists of a $101,000 fine and $5,000,000 in restitution.*fn2

To date defendants' fine and restitution remain largely unpaid. In an attempt to secure assets from which the restitution and fine imposed on Gelb might be satisfied, the government, on May 5, 1990, filed the complaint against which the present motion is directed. The complaint seeks to set aside two conveyances of real estate. The first involves a residential home located at 65-48 Alderton Street, Rego Park, New York. On or about January 25, 1978, defendants Bernard Gelb and Judith Gelb as grantors conveyed all their interest in this property to Judith Gelb, as grantee. This conveyance was recorded on August 3, 1978. An examination of the deed, however, reveals that this conveyance was defective in that the metes and bounds description is inaccurate. See Batista Aff't, Ex. C (copy of deed). It was not until eight and one-half years later, on November 10, 1986, that a "correction deed," with an accurate description of the Rego Park property, was delivered and recorded conveying the property from Bernard and Judith Gelb as grantors to Judith Gelb as grantee. See id. at Ex. E (copy of deed).

The second conveyance involves commercial real estate located at 143-11 Archer Avenue in Jamaica, New York. On October 29, 1986, defendant EDP transferred its interest in the 143-11 Archer Avenue property to defendant 143-11 Realty Corp. The government contends that at the time of this transfer, defendant EDP was controlled

by defendant Bernard Gelb.*fn3 According to the government's papers, the Defendant 143-11 Realty Corp., the transferee, is owned by "defendant Judith Gelb and/or defendant Bernard Gelb." Plaintiff's Mem. in Opp. to Def's Mot. to Dismiss at 5.

Plaintiff's complaint is based on a judgment of conviction for a fine and restitution and alleges that the conveyance of the home in Rego Park and the 1986 conveyance of the commercial property in Jamaica were (i) made at a time when the defendant knew that he was indebted to the United States, specifically the United States Postal Service; (ii) made and accepted without any valuable consideration; and (iii) made with the intent to delay and defraud the plaintiff in its attempts to secure the collection of the indebtedness incurred by the defendant. Plaintiff's complaint seeks an order from this Court setting aside the two real estate conveyances and restraining all four defendants from any further disposition of property and assets belonging to the defendant Bernard Gelb.


A. Introduction

Defendants originally filed a motion seeking to dismiss the complaint. However, that motion was subsequently converted to a motion for summary judgment in an open court proceeding on January 25, 1991. See Batista Reply Aff't, Ex. A at 9-11. Accordingly, the Court's opinion is based on a full range of submissions, including memorandums of law, affirmations (and attached exhibits), declarations and portions of trial transcript.

A motion for summary judgment may be granted only where the moving party demonstrates that no genuine issue of material fact exists for trial and that it is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The duty of a court confronted with such a motion is limited to determining whether the case presents one or more issues of fact which require a trial for resolution; it may not properly resolve those issues itself based upon the affidavits and other evidence before it. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986). In the course of this analysis, the Court must draw all inferences and resolve all ambiguities in favor of the non-moving party. See American Int'l Group v. London Am. Int'l Corp., 664 F.2d 348, 351 (2d Cir. 1981). Nevertheless, summary judgment should not be denied where the only disputed issues are either frivolous or immaterial and would only create further purposeless proceedings for the Court. See United States v. Matheson, 532 F.2d 809, 813 (2d Cir. 1976).

Before examining defendant's arguments in favor of summary judgment, the Court must examine the potential applicability of the Federal Debt Collection Procedures Act of 1990, 28 U.S.C. § 3001-3308, to this action. The Federal Debt Collection Procedures Act ("FDCPA") was enacted by Chapter XXXVI of the Crime Control Act of 1990. The effective date of the Act is May 29, 1991; over one year after the complaint was filed in this action.

However, section 3631(b)(1) of the FDCPA provides that "[t]he amendments made by title I of this Act shall apply with respect to actions pending on the effective date of this Act in any court on (A) a claim for a debt; or (B) a judgment for a debt." Crime Control Act of 1990, Pub.L. No. 101-647, § 3631(b)(1), 104 Stat. 4789, 4966 (1990) (emphasis added). As used in this section, "title I" refers to Subtitle A of Chapter XXXVI of the Crime Control Act of 1990. See Note at 28 U.S.C. § 3001 (Supp. 1991).*fn4 The complaint in this action was filed on May 5, 1990 and thus the action was pending on May 29, 1991. Moreover, in 28 U.S.C. § 3002(3)(B), "debt" is defined as "an amount owing to the United States on account of a . . . fine, assessment, penalty, restitution [or] forfeiture." 28 U.S.C. § 3002(3)(B) (Supp. 1991). The government's present action seeks to set aside two real estate conveyances in an ultimate attempt to satisfy the debt owed by defendant Bernard Gelb by virtue of the imposition of fines and restitution in the underlying criminal case. Although the action is limited to determining the question of title, and further steps would be required to execute on the government's judgment, the Court finds that the present action is a "claim for a debt," or an action for "a judgment for a debt," as those terms are used in section 3631(b)(1). It would appear, therefore, that by operation of section 3631(b)(1), Subtitle A of the FDCPA — now codified at 28 U.S.C. § 3001-3308 — applies to this action.

This conclusion is supported by the legislative history. House Report No. 101-736 provides a background of H.R. 5640, the bill that eventually was enacted as the FDCPA. See H.R.Rep. No. 101-736, 101st Cong.2d Sess., reprinted in 1990 U.S.Code Cong. & Admin.News 6630 [Hereinafter House Report]. The House Report notes initially that the purpose of the FDCPA "is to create a comprehensive statutory framework for the collection of debts owed to the United States government." Id. at 6631. On the issue of the application of the Act, the report indicates:

  [I]n making the transition to a uniform Federal
  statutory scheme from the current patchwork of
  State laws governing collection procedures, the
  [House Judiciary] Committee made the policy
  decision that in addition to new claims arising
  after enactment, the Act should also apply to all
  pending claims. . . .

Id. at 6632. Further, in the section-by-section analysis, the report states that "chapter 176 [28 U.S.C. ยง 3001-3308] shall govern any action pending in any court on [the effective date of the FDCPA] on a claim by the United States for a debt owed to ...

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