MEMORANDUM OPINION AND ORDER
The government commenced this action, pursuant to 18 U.S.C. § 981, seeking forfeiture of the contents of various bank accounts, certificates of deposit, U.S. currency, and certain real and personal property as property involved in money laundering transactions or as property traceable thereto. Christopher Matos, who is currently incarcerated, filed a Notice of Claim to all properties listed in the amended complaint. Barbara Matos, Matos' wife, and Olimpia Concepcion, his mother, also filed Notices of Claim. Pursuant to a Stipulation and Order signed February 18, 1993 and two Stipulations and Orders signed February 25, 1993, the claims of Barbara Matos and Olimpia Concepcion were settled and dismissed with prejudice. In addition, the government withdrew its amended complaint against all property except the contents of twelve of the bank accounts and certificates of deposit and $ 68,400 in U.S. currency.
The government now moves for partial summary judgment against the contents of eight of the twelve accounts that remain in this action. With respect to six of the eight accounts, the government asserts that there is probable cause to believe that the contents of these accounts are forfeitable pursuant to 18 U.S.C. § 981 as property that was involved in money laundering in violation of 18 U.S.C. § 1956, or as property traceable thereto.
With respect to the other two accounts, the government asserts that Matos, the only remaining claimant, lacks standing to challenge these forfeitures because the accounts are in his wife's name only, and he has not submitted an affidavit establishing his interest. In addition, the government argues that even if Matos could establish standing to challenge these last two accounts, the contents of one of these accounts is still subject to forfeiture as property traceable to property involved in money laundering transactions in violation of 18 U.S.C. § 1956.
For the reasons discussed below, the government's motion for partial summary judgment is granted against the contents of the six accounts as property involved in money laundering transactions, as well as against the contents of the seventh account, as property traceable to property involved in money laundering transactions. However, summary judgment is denied against the contents of the eighth account because there remains a genuine issue of material fact regarding Matos' standing to challenge this forfeiture.
Matos was employed by the Immigration and Naturalization Service from 1985 through May 1990. From sometime in 1986 through May 1990, Matos and others accepted bribes in exchange for fraudulently issuing alien registration receipt cards ("green cards"). (Answer to Am. Compl. P 5; Williams Decl. P 4.) Matos always received these bribes in cash and would then transfer the money to his home in Virginia. (Matos Dep. at 75, 99.)
From October 1987 through December 31, 1989, Matos deposited the proceeds of this green card scheme in various bank accounts controlled by Matos, his wife, or by Matos, jointly with his wife or mother. (Williams Decl. P 8; Matos Plea at 15-16; Matos Dep. at 50, 54-57, 59-61, 64-66, 72-74, 77.) From 1986 through 1989, Matos maintained between seven and seventeen accounts at various banks and made numerous deposits of cash and cashiers checks, totalling at least $ 61,594 in 1986; $ 84,500 in 1987; $ 259,298.86 in 1988; and $ 116,257.77 in 1989. (Macchiaroli Aff. PP 6, 33.) The six accounts that the government contends contain property involved in money laundering transactions were opened in the years 1987, 1988 and 1989. (Id. PP 7, 10, 15, 19, 21, 24.)
On December 12, 1990 Matos pleaded guilty to conspiring to accept bribes and issue fraudulent green cards in violation of 18 U.S.C. §§ 201(b)(2)(b) & 1028(a)(2). In addition, Matos pleaded guilty to engaging in money laundering transactions from October 1987 through December 31, 1989 in violation of 18 U.S.C. §§ 1956(a)(1)(A)(ii) & (a)(1)(B)(i).
The six accounts against which the government seeks summary judgment as property involved in money laundering transactions are as follows: Citibank, N.A. account number 4630016195, held in the names of Christopher Matos and Olimpia Concepcion, from which approximately $ 82,000.00 was seized (Macchiaroli Aff. P 7); Emigrant Savings Bank account number 29-3008339-5, held in the names of Cristobal Matos or Olimpia Concepcion, from which $ 11,240.80 was seized (Id. P 10); Emigrant Savings Bank account number 29-3009142-2, held in the names of Cristobal Matos or Olimpia Concepcion, from which $ 18,477.93 was seized (Id. P 15); Gruntal & Company account number 208-06070, held in the names of Christopher Matos and Olimpia Concepcion from which $ 47,672.00 was seized (Id. P 19); First Virginia Bank account number 01055461, held in the names of Christopher and Barbara Matos, from which $ 28,907.41 was seized (Id. P 21); and Riggs National Bank of Virginia account number 14-730-928, held in the names of Christopher and Barbara Matos, from which $ 37,639.05 was seized (Id. P 24) (hereinafter "the Six Accounts").
The two accounts as to which the government contends Matos lacks standing to challenge forfeiture are: First Virginia Bank account number 40594831 ("First Virginia 31 Account"), held in the name of Barbara Matos, from which $ 36,020.95 was seized (Id. P 29); and First Virginia Bank account number 7000143955 ("First Virginia 55 Account"), held in the name of Barbara Matos, from which $ 2,983.64 was seized. (Id. P 27.) The government also argues that the contents of the First Virginia 31 Account are subject to summary judgment on the additional ground that they are traceable to property involved in money laundering transactions.
During his sentencing proceedings, Matos, through his attorney, withdrew his request for a hearing to determine the exact amount of money involved in his money laundering offenses and agreed to a four-point enhancement under the Sentencing Guidelines, which is appropriate when the amount of money involved exceeds $ 600,000. (Williams Aff. Ex. C, at 12.) However, in his Answer, Matos states that the forfeiture should be limited to the amount of $ 188,000, which he claims represents all the proceeds from his green card scheme.
Summary judgment is authorized when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). "As to the materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In examining the record, the court "must resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party." Gibson v. American Broadcasting Cos., Inc., 892 F.2d 1128, 1132 (2d Cir. 1989); see also Celotex, 477 U.S. at 330 n.2.
Section 981 of Title 18 subjects to forfeiture "any property real or personal involved in a transaction or attempted transaction in violation of . . . section 1956 . . . of this title, or any property traceable to such property." 18 U.S.C. § 981(a)(1)(A) (1988 & Supp. IV 1992).
Section 1956, in turn, imposes a criminal penalty on any individual who:
(a)(1) 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-- (A)(i) with the intent to promote the carrying on of specified unlawful activity; or . . . (B) knowing that the transaction is designed in whole or in part--(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity . . . .
18 U.S.C. § 1956(a)(1)(A)(i) & (B)(i) (1988 & Supp. IV 1992). A "transaction" includes, among other things, a deposit, withdrawal, transfer between accounts, or purchase of any certificate of deposit. 18 U.S.C. § 1956(c)(3).
A. Matos' Standing
As an initial matter, Matos' standing to challenge the forfeiture must be determined. To establish standing, Matos must demonstrate a possessory or ownership interest in the contents of the accounts, which may be proven by actual possession, dominion, control, title, or financial stake. United States v. One 1982 Porsche 928, 732 F. Supp. 447, 451 (S.D.N.Y. 1990); see also Mercado v. U.S. Customs Service, 873 F.2d 641, 644 (2d Cir. 1989). The government does not challenge Matos' standing to contest the forfeiture of the Six Accounts, which are held in his name. However, First Virginia 55 and First Virginia 31 are held in his wife's name only, and the government contends that he has not raised a genuine issue of material fact regarding his interest in these accounts.
In response to the government's Rule 3(g) statement, Matos states that "Christopher Matos and his wife, Barbara Matos . . . permitted the other access to the other's individual accounts. As husband and wife they shared jointly in their property holdings. He had authority to sign his wife's name and make withdrawals or deposits as the need arose." (Matos Response to Pl. R. 3(g) Statement P 9; see also Matos Pre-trial Narr. at 2.) These statements raise a genuine issue of material fact as to Matos' standing to challenge the forfeiture of these accounts.
B. Probable Cause
In a civil forfeiture action, the government "must be able to show a nexus between the illegal conduct and the seized property." United States v. Daccarett, 6 F.3d 37, 56 (2d Cir. 1993). "The government is not required to link a bank account to a particular illegal transaction, but it must have probable cause to connect the account to criminal activity." Id. Probable cause is established if the government is able to demonstrate that it has "reasonable grounds, more than mere suspicion, to believe that the property is subject to forfeiture." Marine Midland Bank, N.A. v. United States, 11 F.3d 1119, 1126 (2d Cir. 1993); see also United States v. Banco Cafetero Panama, 797 F.2d 1154, 1160 (2d Cir. 1986).
To establish probable cause, the government relies primarily on Matos' own sworn statements and a careful examination of the records of each of the defendant accounts. Matos has admitted to laundering money by depositing the proceeds from the green card scheme in various bank accounts to avoid detection. (Matos Plea at 15-16.) He has also admitted in his deposition that he commingled his legitimate income from the INS with the proceeds of his green card scheme. (Matos Dep. at 53-54.) While his salary, combined with that of his wife, for the years 1986 through 1990 never exceeded $ 76,000 per year, Matos maintained seven to seventeen bank accounts during those years and made deposits in cash and cashiers checks totalling at least $ 521,650.63. (Matos Dep. at 15; Macchiaroli Aff. P 33.)
In his deposition, Matos admitted that he deposited at least some of the proceeds of his green card scheme into each of the Six Accounts. (Matos Dep. 50, 54-57, 59-61, 64-66, 72-74, 77.) The bank statements for each of these accounts show a large number of deposits of cash and cashiers checks, as well as transfers from other accounts which had received a large number of deposits of cash or cashiers checks. (Macchiaroli Aff. PP 8, 12-14, 16-18, 20, 22-23, 25-26.) With respect to four of the Six Accounts, the government has demonstrated that the total of the deposits traceable to cash and cashiers checks exceeds the total of the amounts seized in the accounts. (Id. PP 12-14, 16-18, 20, 22-23.) With respect to the other two accounts, the government has shown significant deposits traceable to cash and cashiers checks. (Id. PP 8, 25-26.)
The government contends that the entire balance of each of the Six Accounts is subject to forfeiture even if some of the funds were derived from legitimate sources because the deposits of legitimate monies facilitated the money laundering by providing a cover for the illegitimate funds. This facilitation theory is premised on the fact that money laundering is often made more difficult to detect by the presence of legitimate funds in an account in which proceeds of illegal activities are also deposited.
Section 981 subjects to forfeiture any "property . . . involved in" money laundering transactions. Courts have construed "property involved in" to authorize the forfeiture of bank account funds not directly traceable to a money laundering transaction, but which "facilitated" the transaction. See United States v. Certain Funds on Deposit in Account No. 01-0-71417, 769 F. Supp. 80, 84 (E.D.N.Y. 1991) (hereinafter "Certain Funds"); United States v. All Monies ($ 477.048.62) in Account No. 90-3617-3, 754 F. Supp. 1467, 1472-73 (D. Hawaii 1991); see also 134 Cong. Rec. S17365 (daily ed. Nov. 10, 1988) ("the term 'property involved' is intended to include the money or other property being laundered . . . , any commissions or fees paid to the launderer, and any property used to facilitate the laundering offense.") But see United States v. $ 448,342.85, 969 F.2d 474, 476 (7th Cir. 1992) (rejecting this interpretation of the term "involved in".); United States v. All Funds Presently on Deposit or Attempted to Be Deposited in Any Accounts Maintained at American Express Bank, 832 F. Supp. 542 (E.D.N.Y. 1993) (same).
In Certain Funds the government sought the forfeiture of several bank accounts, the contents of which consisted of proceeds of fraudulently obtained loans, as well as legitimate funds. Relying in part on the legislative history of § 981, Judge Spatt allowed the forfeiture of all funds in the accounts on the theory that the legitimate funds had been used to facilitate the money laundering offenses. The court stated:
Limiting the forfeiture of funds under these circumstances to the proceeds of the initial fraudulent activity would effectively undermine the purpose of the forfeiture statute. Criminal activity such as money laundering largely depends upon the use of legitimate monies to advance or facilitate the scheme. It is precisely the commingling of tainted funds with legitimate money that facilitates the laundering and enables it to continue.