MEMORANDUM & ORDER
BARBARA S. JONES
UNITED STATES DISTRICT JUDGE
This case involves the forfeiture of an antique gold platter known as a phiale mesomphalos (the "Phiale"). Pending are claimant Michael H. Steinhardt's and plaintiff United States of America's cross motions for summary judgment. For the reasons stated below, summary judgement is granted to the United States.
The defendant-in-rem is a 4th Century B.C. antique gold platter of Sicilian origin. Its circuitous path to the United States began sometime around 1980, and culminated in the current forfeiture action.
In 1980, Vincenzo Pappalardo, a private antique collector living in Catania, Sicily in Italy approached Dr. Giacomo Manganaro, a professor of Greek history and Numismatics, for an expert opinion regarding the authenticity of the Phiale, which was in Pappalardo's collection at the time. The Phiale had an inscription along its edge, written in a Greek Doric dialect that had been spoken in the ancient Greek-Sicilian colonies. Based on that inscription and his own study, Dr. Manganaro concluded that the Phiale was authentic and of Sicilian origin.
Later in 1980, Pappalardo traded the Phiale to Vincenzo Cammarata, a Sicilian coin dealer and art collector, for art works valued at about 30 million Italian lire (approximately $ 20,000).
In 1991, Cammarata showed the Phiale and a gold-plated silver cup to Silvana Verga, an employee of the Monuments and Fine Arts Bureau in Palermo, Sicily, and to Enzo Brai, an Italian photographer. Cammarata told Verga and Brai that the Phiale and silver cup had been found near Caltavuturo, Sicily during the completion of some electrical work by an Italian utility company.
Cammarata also gave a photograph of the Phiale to William Veres, an art dealer and personal friend who owned an art dealership company named Stedron based in Zurich, Switzerland. Veres, a specialist in antiquities, became interested in acquiring the Phiale despite some doubts as to its authenticity, and later acquired the Phiale from Cammarata in exchange for objects worth about 140 million lire (approximately $ 90,000).
Veres brought the Phiale to the attention of Robert Haber,
an American art dealer and owner of Robert Haber & Company Ancient Art in New York City.
In November, 1991, Haber traveled to Sicily to meet Veres and to see the Phiale in person.
Haber became interested in the Phiale and believed that claimant Michael Steinhardt, a client of his, might be interested in acquiring it.
Haber had previously sold Steinhardt 20 to 30 objects, totaling $ 4 million to $ 6 million in sales.
Haber told Steinhardt that the Phiale was the twin of one belonging to the Metropolitan Museum of Art in New York City, and that its seller was a Sicilian coin dealer.
Thereafter, Steinhardt, with Haber as an intermediary, agreed to purchase the Phiale. Under the final terms of the agreement, as incorporated in a telefax dated December 4, 1991, Steinhardt agreed to pay 1.3 billion lire (over $ 1 million) in two equal wire transfer installments plus a 15% commission fee for the Phiale. In total, Steinhardt agreed to pay approximately $ 1.2 million to acquire the Phiale, the first installment of which would be wired to Credit Suisse, New York in favor of Veres' Stedron account at Bank Leu in Zurich, Switzerland.
In addition, a one page document entitled "Terms of Sale" and signed by Veres provided that "if the object is confiscated or impounded by customs agents or a claim is made by any country or governmental agency whatsoever, full compensation will be made immediately to the purchaser."
The Terms of Sale further provided that "[a] letter is to be written by Dr. Manganaro that he saw the object 15 years ago in Switz."
On December 6, 1991, Steinhardt wired the first money transfer installment from his account in New York to Veres' Stedron account
On December 10, 1991, Haber flew from New York to Zurich. From there he traveled across the Swiss Alps to Lugano, Switzerland, a town near the Swiss-Italian border that is about a three-hour car drive from Zurich.
On or about December 12, 1991, Haber took possession of the Phiale from Veres.
The transfer was confirmed in a commercial invoice signed by Veres and issued by Stedron, describing the object as "ONE GOLD BOWL - CLASSICAL . . . DATE - C. 450 B.C. . . . VALUE U.S. $ 250,000."
On December 13, 1991, Haber sent a two-page fax to Larry Baker at Jet Air Service, Inc. ("Jet Air"), Haber's customs broker at J.F.K. International Airport in New York. The fax included information about Haber's return flight and a copy of the commercial invoice for the Phiale.
Jet Air, in turn, prepared two Customs forms (collectively the "Customs forms"). First, Jet Air prepared an Entry and Immediate Delivery form (Customs Form 3461) to obtain release of the Phiale by a Customs inspection team prior to formal entry. This form listed the Phiale's country of origin as "CH," the code for Switzerland. Second, Jet Air prepared an Entry Summary form (Customs Form 7501), which also listed the Phiale's country of origin as "CH." In addition, this form listed the Phiale's value at $ 250,000, despite the fact that it had just been sold for over $ 1 million. The form made no mention of the Phiale's Sicilian origin or of its Italian history. Haber was listed as the importer of record.
On or about December 14, 1991, Haber returned from Lugano to Zurich.
On December 15, 1991, Haber flew from Geneva to J.F.K. International Airport in New York carrying the Phiale. From there, he entered the United States with the Phiale.
On January 6, 1992, Haber or Steinhardt consigned the Phiale to the Metropolitan Museum of Art to determine its authenticity. The museum declared the Phiale authentic and returned it to Haber or Steinhardt on January 24, 1992.
On January 29, 1992, Steinhardt wired the second installment from his New York account to the Stedron account. On March 11, 1992, Steinhardt wired Haber's commission of $ 162,364 to the Stedron account. The commission price had been determined by taking 15% of the purchase price in lire and converting the amount to dollars.
From 1992 to 1995, Steinhardt possessed the Phiale and displayed it in his home.
On February 16, 1995, the Italian Government submitted a Letters Rogatory Request to the United States pursuant to the Treaty on Mutual Legal Assistance in Criminal Matters seeking assistance in (1) investigating the circumstances surrounding the exportation from Italy of the Phiale and its subsequent importation into the United States, and (2) confiscating the Phiale so that it could be returned to Italy.
On November 9, 1995, agents of the United States Customs Service, acting pursuant to a seizure warrant issued by Chief Magistrate Judge Naomi Reice Buchwald, seized the Phiale from Steinhardt's home in New York City. Magistrate Judge Buchwald issued the warrant pursuant to 18 U.S.C. § 545 and to 19 U.S.C. § 1595a, finding that the Government had shown probable cause to believe that the Phiale was subject to civil forfeiture.
On December 13, 1995, the United States filed the current civil forfeiture action, seeking forfeiture of the Phiale pursuant to 18 U.S.C. §§ 545 and 981(a)(1)(C) and to 19 U.S.C. § 1595a(c). The Government's Complaint, as amended on February 13, 1995, alleged that the Phiale had been imported illegally into the United States due to the materially false statements provided by Haber in the Customs forms relating to the Phiale's country of origin. In addition, the Complaint alleged that the Phiale had been exported illegally from Italy pursuant to Article 44 of Italy's Law of June 1, 1939, No. 1089, regarding the Protection of Objects of Artistic and Historic Interest.
On December 26, 1995, Steinhardt filed the pending motion for summary judgment against the United States in the forfeiture action, claiming that the Phiale is not subject to forfeiture under 18 U.S.C. §§ 545 or 981(a)(1)(C) or under 19 U.S.C. § 1595a(c). Specifically, Steinhardt contends that any alleged misstatements by Haber at the time of the Phiale's importation were not material, as required by the statutes. Steinhardt further asserts that he is an innocent owner as a matter of law under each of the statutes. Finally, Steinhardt argues that forfeiture of the Phiale would violate the Excessive Fines Clause of the Eighth Amendment.
On May 16, 1996, the United States filed its opposition to Steinhardt's motion and cross-moved for summary judgment. The Government argues that: (1) Steinhardt lacks standing to challenge forfeiture of the Phiale because it belongs to Italy; (2) neither 18 U.S.C. § 545 nor 19 U.S.C. § 1595a(c) provides for an "innocent owner defense;" and (3) forfeiture of the Phiale does not violate the Excessive Fines Clause of the Eighth Amendment.
I. The Applicable Standard for Summary Judgment
Summary judgment is appropriate only when "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). It is the nonmoving party's burden to "demonstrate to the court the existence of a genuine issue of material fact." Lendino v. Trans Union Credit Info. Co., 970 F.2d 1110, 1112 (2d Cir. 1992). In deciding cross-motions for summary judgment, the Court considers each motion separately, and on each views the facts in the light most favorable to the nonmoving party. Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).
"A fact is material when its resolution would 'affect the outcome of the suit under the governing law,' and a dispute about a material fact is genuine 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party'." General Elec. Co. v. New York State Dep't of Labor, 936 F.2d 1448, 1452 (2d Cir. 1991) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Where undisputed material facts are properly placed before the Court, "those facts will be deemed admitted, unless they are properly controverted by the nonmoving party." Glazer v. Formica Corp., 964 F.2d 149, 154 (2d Cir. 1992).
As an initial matter, the Government contends that Steinhardt lacks standing to challenge forfeiture of the Phiale. The Court disagrees.
To establish standing in a civil forfeiture proceeding, a claimant must demonstrate some ownership or possessory interest in the property at issue. Mercado v. United States Customs Serv., 873 F.2d 641, 644 (2d Cir. 1989). A claimant may prove this interest "by actual possession, dominion, control, title, or financial stake." United States v. Contents of Account Numbers 208-06070 & 208-06068-1-2, 847 F. Supp. 329, 333 (S.D.N.Y. 1994).
It is undisputed that Steinhardt exercised actual possession, dominion and control over the Phiale from the time he took possession of and displayed it his home in 1992 until it was seized on November 9, 1995. In addition, Steinhardt has a financial stake in the resolution of this civil forfeiture action. As these facts demonstrate sufficient ownership of or possessory interests in the Phiale, Steinhardt has standing to contest the Government's forfeiture action.
III. The Relevant Forfeiture Statutes
The Government seeks civil forfeiture of the Phiale pursuant to 18 U.S.C. §§ 545 and 981(a)(1)(C) and to 19 U.S.C. § 1595a(c).
The Government bears the initial burden of establishing that there is probable cause to believe that the Phiale is subject to forfeiture under any statute. United States v. Two Parcels of Property Located at 19 & 25 Castle Street, 31 F.3d 35, 39 (2d Cir. 1994). To meet this burden, the Government must show "reasonable grounds, rising above the level of mere suspicion, to believe that [the] property is subject to forfeiture." United States v. 15 Black Ledge Drive, 897 F.2d 97, 101 (2d Cir. 1990). Once the Government has met this burden, the burden of proof shifts to the claimant to show by a preponderance of the evidence that the Phiale is not, in fact, subject to forfeiture. United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483, 487 (2d Cir. 1995).
A. 18 U.S.C. § 545
Section 545 of Title 18 of the United States Code prohibits the importation of merchandise in a manner contrary to law.
The Government contends that Haber violated Section 545 by making materially false statements on the Customs forms in violation of 18 U.S.C. § 542. Specifically, the Government claims that Haber falsely identified the Phiale's country of origin as "CH" or Switzerland, rather than Italy, on the Customs forms.
1. Importation "Contrary to Law" -- Violation of 18 U.S.C. § 542
Section 542 of Title 18 of the United States Code prohibits the making of false statements on various documents including Customs forms.
18 U.S.C. § 542. For purposes of the statute, an allegedly false statement must be material. See United States v. Holmquist, 36 F.3d 154, 157 (1st Cir. 1994), cert. denied, 514 U.S. 1084, 131 L. Ed. 2d 724, 115 S. Ct. 1797 (1995); United States v. Bagnall, 907 F.2d 432, 435 (3d Cir. 1990); United States v. Teraoka, 669 F.2d 577, 578 (9th Cir. 1982).
The parties disagree, however, over the standard the Court should employ to determine the materiality of Haber's statements on the Customs forms. Steinhardt, citing Teraoka and United States v. Meldish, 722 F.2d 26 (2d Cir. 1983), cert. denied, 465 U.S. 1101, 80 L. Ed. 2d 128, 104 S. Ct. 1597 (1984), urges the Court to apply a rigid "but for" standard, under which the statements in the Customs forms are not material unless the Government can show that but for those statements the Phiale would not have been permitted into the country.
The Government, citing Bagnall and Holmquist, argues that a statement is material "not only if it is calculated to effect the impermissible introduction of ineligible or restricted goods, but also if it affects or facilitates the importation process in any other way." Bagnall, 907 F.2d at 436; see also Holmquist, 36 F.3d at 159 (holding that false statement is material "if it has the potential significantly to affect the integrity or operation of the importation process as a whole").
The standard proposed by the Government is consistent with the language of the statute, which prohibits importations "by means of" false statements. "By means of" implies that a person has made a false statement at some significant stage in the importation process, not that the importation could not otherwise have been achieved. See Holmquist, 36 F.3d at 159 ("'by means of' [in Section 542] is not synonymous with 'because of'").
This standard is also consistent with the fundamental purpose of the statute, which is to "ensure full disclosure in importation and thereby maintain the integrity of the importation process as a whole." Holmquist, 36 F.3d at 160 (citing Bagnall, 907 F.2d at 436). Applying a rigid "but for" standard, as Steinhardt proposes, would thwart this purpose by preventing prosecution of many statements that unquestionably are false and deleterious to the importation process, but nonetheless cannot be proven to be the crucial factor in an object's admission through Customs.
Moreover, this standard is consistent with the materiality standard applied in other false-statement contexts. See, e.g., Kungys v. United States, 485 U.S. 759, 770-71, 99 L. Ed. 2d 839, 108 S. Ct. 1537 (1988) (applying "natural tendency to influence" standard to 8 U.S.C. § 1451(a), denaturalization statute); United States v. Regan, 103 F.3d 1072, 1081 (2d Cir.) (applying "natural tendency to influence" standard to is U.S.C. § 1623, perjury statute), cert. denied, 138 L. Ed. 2d 992, 117 S. Ct. 2484 (1997); United States v. Ali, 68 F.3d 1468, 1474-75 (2d Cir. 1995) (applying "natural tendency to influence" standard to 18 U.S.C. § 1001, false statements statute).
Having considered these cases and the parties arguments, the Court determines that the standard for materiality under Section 542 is whether the false statement had a natural tendency to influence the actions or decisions of the Customs Service.
Applying this materiality standard here, the Court finds that the statements in the Customs forms -- misidentifying Switzerland as the country of origin -- were materially false and in violation of Section 542.
Customs' procedures provide that the country of origin is a significant factor in determining whether Customs officials should admit an object, hold it for further information, or seize it as smuggled, improperly declared or undervalued. See 9 Government Exhibit 20, Customs Directive No. 5230-15. Since certain countries have stringent laws to protect their cultural and artistic heritage, identification of such a country raises a red flag to Customs officials who are reviewing Customs forms. Italy is known to be such a country; Switzerland is not.
Truthful identification of Italy on the customs forms would have placed the Customs Service on notice that an object of antiquity, dated circa 450 B.C., was being exported from a country with strict antiquity-protection laws. This information would have been useful to the agency's determination, and could have prevented Haber from bringing the Phiale into the country illegally. Certainly, such information would have had a tendency to influence the Customs Service's decision-making process and to significantly affect the integrity of the importation process as a whole.
Based on these facts, the Court concludes that the Government has met its burden of establishing that there is probable cause to believe that the Phiale is subject to forfeiture pursuant to 18 U.S.C. § 545 as merchandise imported contrary to law in violation of 18 U.S.C. § 542.
The burden of proof, therefore, shifts to Steinhardt to show by a preponderance of the evidence that the Phiale is not, in fact, subject to forfeiture.
2. Availability of an Innocent Owner Defense Under 18 U.S.C. § 545