The opinion of the court was delivered by: KAPLAN
LEWIS A. KAPLAN, District Judge.
This case presents the question whether the Court may restrain substitute assets subsequent to indictment but before conviction in a case charging that the defendants are liable to substantial forfeitures.
Following the superseding indictment, Chief Judge Griesa issued an ex parte post-indictment restraining order preventing the transfer or dissipation of Berg's assets and those of his co-conspirators. Berg and others promptly brought to the attention of the undersigned certain alleged errors and ambiguities in the text of the restraining order. Accordingly, on March 19, 1998, this Court signed a second post-indictment restraining order (the "Amended Order"), the object of which was to correct any failings in the original form of order, without prejudice to a motion to vacate.
Berg now has moved to vacate the Amended Order on the grounds that (i) the Court has no authority to enter a post-indictment restraining order ex parte, (ii) the assets of Berg that were restrained were obtained from legitimate sources and therefore are restrainable only as substitute assets, (iii) the Court lacks authority to restrain substitute assets prior to trial, and (iv) in any case, pre-trial restraint of assets is not appropriate in this case.
Availability of Ex Parte Relief
Berg begins with the contention that there is no statutory basis for granting a post-indictment restraining order without prior notice to the defendants. The government rejoins that the Court of Appeals' in banc decision in United States v. Monsanto2 supports the proposition that the government is entitled to ex parte relief in appropriate circumstances in a case such as this.
There is no need to pass on this issue. The Amended Order was entered only after Berg received notice and an opportunity to be heard. The Court considers the motion to vacate the Amended Order de novo. In consequence, nothing turns on whether the statute (and Monsanto) authorized ex parte relief.
The Availability of Pretrial Restraint of Substitute Assets
Berg argues that the assets restrained by the Amended Order include a passbook savings account and an automobile, both of which were the product of legitimate sources of income. He contends that the government is not entitled to restrain these assets prior to trial because they are not forfeitable as proceeds of the crime alleged and because the government lacks any authority to restrain substitute assets prior to conviction. The government counters that pretrial restraint of substitute assets is appropriate and, in any case, that the defendant may not challenge the forfeitability of assets prior to trial except in the context of a claim that the pretrial restraint of the assets effectively deprives him of the Sixth Amendment right to counsel. It argues, moreover, that Berg had no legitimate source of income during the relevant period and, in consequence, that the restrained assets are the product of the illegal activities that are the subject of the indictment. If, as the government argues, however, the pretrial restraint of substitute assets is appropriate, there is no need to determine the source of the assets that have been restrained. As long as their value is less than the amount potentially subject to forfeiture, the Court's authority to restrain them would be beyond question. Accordingly, the Court turns to that question.