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UNITED STATES v. ALL RIGHT

October 14, 1992

UNITED STATES OF AMERICA,
v.
All Right, Title and Interest in the Assets of and the Leasehold and Tenancy Interests in the Business known as Joseph Health and Beauty Supply, located at 3825 Broadway, New York, N.Y., Defendant.



The opinion of the court was delivered by: PIERRE N. LEVAL

MEMORANDUM AND ORDER

 PIERRE N. LEVAL, U.S.D.J.

 Claimant Jose Vargas moves for reconsideration of an order entered in the emergency motions part of this court on August 17, 1992, approving the seizure of the assets of Joseph Beauty Supply.

 Magistrate Judge Sharon Grubin issued an ex parte warrant of seizure on June 29, 1992. Vargas moved to vacate the seizure before Judge Louis Stanton of this court, in a criminal action brought by the United States against Vargas ( No. 92 Cr. 0589 (LLS)). On August 14, 1992, Judge Stanton vacated the order of seizure.

 The same day, August 14, 1992, the Government instituted this in rem civil action for seizure and forfeiture, which was assigned to this judge. On August 17, 1992, the Government sought a probable cause determination in the civil forfeiture action in Part I (emergency motions) before Judge Louis Freeh, in this judge's absence. During the hearing, the Government agreed to modify its complaint to allege facts linking the defendant-in-rem to a scheme of mail fraud in violation of 18 U.S.C. § 1341. The Government argued that mail fraud constituted predicate "specified unlawful activity" as required by 18 U.S.C. § 1956. Judge Freeh found on August 17, 1992, that the seizure warrant in the civil action was properly issuable and could be executed.

 On August 20, 1992, claimant Vargas moved before Judge Stanton for review of Judge Freeh's ruling. On August 31, 1992, Judge Stanton declined to rule because Judge Freeh's order had been issued in the civil forfeiture action, which was not before him. Claimant subsequently sought release of the seized property before this judge.

 The Government has demonstrated that there is statutory authority for seizure of Joseph Beauty Supply. The seizure was made under authority of 18 U.S.C. § 981(a)(1)(A) which permits forfeiture of "Any Property, real or personal, involved in a transaction or attempted transaction in violation of . . . section 1956 . . . of this title . . . ." Seizures under § 981 are subject to a showing of probable cause under § 981(d), in accordance with the customs laws relating to seizure, 19 U.S.C. § 1602, 1615.

 Section 1956(a)(1)(A)(i) provides:

 Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity . . . with the intent to promote the carrying on of specified unlawful activity . . . shall be sentenced to a fine . . . .

 Thus, the elements of the offense are

 (1) knowledge that the property involved in a financial transaction represents the proceeds of unlawful activity,

 (2) that the defendant conducted a financial transaction,

 (3) that the financial transaction involved the proceeds of "specified unlawful activity," (including mail fraud in ...


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