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UNITED STATES v. 228 BLAIR AVE.

May 3, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL RIGHT, TITLE AND INTEREST IN THE REAL PROPERTY AND BUILDINGS KNOWN AS 228 BLAIR AVENUE, BRONX, NEW YORK, 230 BLAIR AVENUE, BRONX, NEW YORK, 232 BLAIR AVENUE, BRONX, NEW YORK, 234 BLAIR AVENUE, BRONX, NEW YORK, 236 BLAIR AVENUE, BRONX, NEW YORK, 238 BLAIR AVENUE, BRONX, NEW YORK, 249 BLAIR AVENUE, BRONX, NEW YORK, Defendants-in-rem.



The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 The Government commenced this civil forfeiture action against certain real property located in the Bronx, New York. The Government now moves, pursuant to 21 U.S.C. § 881(i), for an order staying all discovery and other proceedings in this case pending the trial in United States v. Eric Millan-Colon, S9 91 Cr. 685 (SWK). The Government also moves, pursuant to Rules 12(b)(1) and (6) of the Federal Rules of Civil Procedure, to dismiss three counterclaims filed with the defendants' answer. Claimants Anthony J. Puma ("Puma"), Mario Marciano ("Marciano") and Flamar Enterprises, Ltd. ("Flamar") (collectively "Claimants") oppose the Government's motion for a stay and motion to dismiss, and cross-move for an order permitting them to amend their answer to include a Bivens1 action against Assistant United States Attorney Sharon Cohen Levin and New York Drug Enforcement Task Force ("NYDETF") agents William O'Flaherty ("O'Flaherty") and David Dongilli ("Dongilli").

 BACKGROUND

 Claimants allege that on October 22, 1987, the defendant properties were purchased by Puma and Marciano under the corporate name of Flamar. Answer at P 34. The open land was developed and buildings were erected by Marciano Construction Company. All financing was arranged through bank loans. Id.

 On March 30, and 31, 1990, seven contracts of sale were executed for the seven defendant properties, whereby Flamar agreed to sell them to criminal defendant Eric Millan-Colon ("Millan") for $ 314,600 each. Answer at P 35. The terms of each contract required & $ 15,000 downpayment, with the remainder to be paid at the closing as follows: § 79,600 in cash or certified or savings bank check and a mortgage of $ 200,000. Id. Thereafter, on March 30 and April 11, 1990, Millan tendered seven $ 15,000 downpayments by personal check. Id.

 In November 1990, bank loans were arranged by claimants in order to replace existing building loans for four of the seven lots, namely, 234, 236, 238 and 240 Blair Avenue. Answer at P 36. Simultaneously, deeds were executed transferring ownership of these properties from Flamar, as follows: 234 and 236 Blair Avenue to Marciana; 238 and 240 Blair Avenue to Puma. Flamar remained titleholder of the remaining three lots. Id.

 On October 10, 1990, after the adjournment of several closing dates, claimants demanded an additional downpayment of $ 100,000, which Millan paid, in order to extend the default provisions of the contracts until the end of 1990. Answer at P 37. In June 1991, a "time of the essence" notice was served on Millan's attorney, announcing a July 25, 1991 closing date or, in the alternative, a termination of the contracts of sale via the default provisions in each. Answer at P 37. On July 25, 1991, no closing being held, the contracts were terminated and the downpayments forfeited to the claimants pursuant to the default provisions in the contracts. Id.

 Meanwhile, in October 1990, the NYDETF began conducting an investigation concerning narcotics trafficking and money laundering activities by Millan and others. See Affidavit of Detective William O'Flaherty, sworn to on Aug. 7, 1991 (the "O'Flaherty Aff."), at 4. On August 1, 1991, Millan was arrested and charged with conspiracy to distribute and possess heroin, substantive narcotics trafficking, the unlawful possession and use of firearms, and engaging in a continuing criminal enterprise.

 Following Millan's arrest, the Government applied to the Court for the issuance of warrants to seize and forfeit all right, title and interest in the above-captioned properties. The application was based on the Affidavit of Detective William O'Flaherty, wherein he asserted that the acquisition of these properties was derived from proceeds of illegal narcotics activity or property involved in transactions in violation of 18 U.S.C. §§ 1956 and 1957. Specifically, O'Flaherty asserted that Millan had ownership interests in the defendant properties. O'Flaherty based this belief on entries in Millan's checkbook, seized pursuant to an August 1, 1991 search, indicating that on March 30, 1990, Millan made four $ 15,000 payments to Flamar for "228 Blair", "230 Blair", "232 Blair," and "234 Blair." O'Flaherty Aff. at P 18. The register further revealed that on April 11, 1990, Millan made three $ 15,000 payments to Flamar for "236 Blair", "238 Blair", and "240 Blair." Id. O'Flaherty also indicated that during the execution of search and seizure warrants on EJay Enterprises, Ltd., one of Millan's many businesses law enforcement officials recovered a file titled "Blair Realty", containing: (1) a "fax cover sheet" dated January 4, 1991 from Marciano General Contracting; (2) a list of tenants for the 18 rental units located at 228-240 Blair Avenue; (3) receipts from several hardware stores for purchases of lightbulbs, locks, and assorted maintenance items; (4) two credit card receipts from Jose Santos, superintendent of the Blair apartments; and (5) a blank apartment lease. Id. at P 19. In addition, O'Flaherty testified that information obtained from intercepted telephone conversations indicated that Heriberto Rosario, an alleged co-conspirator of Millan, called a woman at Marciano Construction Company and discussed with her matters concerning his "houses" on Blair Avenue in the Bronx. Id. at P 20. Similarly, in an intercepted conversation on April 24, 1991, Millan mentioned that Puma and Marciano were responsible for his "other loans." Based on this information, the warrants were issued on August 7, 1991. *fn2" Id.

 On February 28, 1992, the Government filed a forfeiture complaint seeking forfeiture of the defendant properties on the grounds that there is probable cause to believe that the properties were (1) proceeds traceable to exchanges of controlled substances (21 U.S.C. § 881(a)(6) *fn3" ); (2) property involved in a transaction or attempted transaction in violation of 18 U.S.C. § 1956 of § 1957 (18 U.S.C. § 981(a)(1)(A) *fn4" ); or (3) property traceable to such property.

 On March 19, 1992, claimants filed an Answer asserting an ownership interest in the properties, and, as an affirmative defense, that they are innocent owners pursuant to 21 U.S.C. § 881(A)(6) and 18 U.S.C. § 981(a)(2). Answer at P 26. In addition, claimants note that they are not named as parties to the underlying indictment or targets of the criminal investigation in United States v. Eric Millan-Colon, et al., S9 91 Cr. 685 (SWK). In fact, according to the claimants, the only connection they have with the Millan case is the contract executed by criminal defendant Eric Millan-Colon to purchase the subject properties. This contract was defaulted, however, and as a result neither title nor any other interest passed to him.

 Based on the forgoing, claimants seek (1) monetary damages for alleged violations of their Fourth and Fifth Amendment Rights (First Counterclaim); (2) discovery from the Government as to the management firm managing the properties and an accounting of the collection of rental income (Second Counterclaim); and (3) attorneys' fees pursuant to the Equal Access to Justice Act (Third Counterclaim).

 The Government now moves for a stay pursuant to 21 U.S.C. § 881(i), which provides in relevant part that the filing of an indictment charging narcotics violations that is related to a civil forfeiture proceeding "shall, upon motion of the United States and for good cause shown, stay the civil forfeiture proceeding." The Government argues that such a stay is necessary as (1) the Millan criminal prosecution is closely related to the instant action; and (2) disclosure of the identities of the confidential informants who will testify in both the forfeiture case and the criminal trial ...


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