The opinion of the court was delivered by: Owen, District Judge.
This Opinion and Order serves to supplement my prior oral findings and
order of July 6, 2001 that the previously-imposed confinement of Martin
A. Armstrong in the Metropolitan Correctional Center on an order of civil
contempt still serves coercive purposes; it might yet yield its intended
result and should therefore be continued in order to coerce compliance
with this Court's Contempt Order of August 25, 2000. The estimated value
of the missing corporate assets, as documented by the Temporary
Receiver,*fn1 is approximately $14.9 million and Armstrong has come
forward with not a scintilla of evidence to suggest good faith efforts to
comply with the Contempt Order, or that he is either unable to comply or
that the contempt has lost all of its coercive effect.
I reached this conclusion at the hearing on July 6, 2001 and, upon
receipt of opposition papers from Armstrong's CJA counsel, I reexamined
the issue and remain of the opinion, based on my "individualized
assessment" of Armstrong and the circumstances of the contempt, see In Re
Grand Jury Subpoena (John Doe), 150 F.3d 170, 172 (2d Cir. 1998), that
there is a "realistic possibility" that extending the term of Armstrong's
confinement will eventually compel compliance with the Contempt Order.
See Simkin v. United States, 715 F.2d 34, 37 (2d Cir. 1983); United
States v. Salerno, 632 F. Supp. 529, 531 (S.D.N.Y. 1986) (citing In the
Matter of Milton Parrish, 782 F.2d 325 (2d Cir. 1986)). The authority for
such continuation is derived from the District Court's general and
inherent equitable powers to coerce compliance with its lawful orders.*fn2
See Chambers v. NASCO, be., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27
(1991); Shillitani v. United States, 384 U.S. 364, 86 S.Ct. 1531, 16
L.Ed.2d 622 (1966); Sigety v. Abrams, 632 F.2d 969, 976 (2d Cir. 1980).
The burden is on Armstrong to prove impossibility of compliance or that
confinement has become punitive and not coercive. See In re Marc Rich &
Co., A.G., 736 F.2d 864, 866 (2d Cir. 1984); Simkin, 715 F.2d at 36-37.
Armstrong has net produced the missing black Compaq computer (Contempt
Order, ¶ 1(1)), the missing gray Dell computer hard drive (Contempt
Order, ¶ 1(2)) or any additional corporate assets since January
14, 2000, all of which are specifically identified in the Contempt Order
of August 25, 2000.*fn3 Further, Armstrong has communicated no
information whatsoever about the present disposition of those items to
the Temporary Receiver, despite no fewer than fourteen letters from April
2000 through June 2001 from the Temporary Receiver to Armstrong
personally and his attorneys; all of this correspondence, the latest of
which, representative thereof, is attached hereto as Appendix A, offers
the Receiver's assistance in retrieving items identified in the Contempt
Order and purging Armstrong's contempt. Nevertheless, Armstrong has not
come forward with any evidence regarding the whereabouts, much less
produced, the 102 gold bars (Contempt Order, ¶ IV(2)), the 699 gold
bullion coins (Contempt Order, ¶ IV(1)), the ancient coins purchased
pre-September 1998 (Contempt Order, ¶ IV(4)) and the $750,000 bust of
Julius Caesar (Contempt Order, ¶ IV(3)), all detailed, again, in
this Court's Contempt Order at pages 9-18 and, once more, in the
declaration of Tancred V. Schiavoni, Esq., Special Counsel to the
Temporary Receiver, executed on July 6, 2001, at ¶¶ 2-3, 6-12.
The burden of producing such evidence is on Armstrong. "It is
well-settled that if a court finds that a defendant could at some time in
the past have complied with a court order, the court should presume a
present ability to comply . . . ." See Thom, 760 F.2d at 739-740 (quoting
United States v. Rylander, 460 U.S. 752, 757, 103 S.Ct. 1548, 75 L.Ed.2d
521 (1983)). The record is clear that Armstrong remains in possession,
custody and control of the corporate assets identified in the Contempt
Order and, most recently reidentified in the Stamoulis and Schiavoni
Declarations. For example, Armstrong testified at the contempt hearing on
January 14, 2000 that he took the gold bars from the office at Carnegie
Center in 1998, brought them home and subsequently gave them to Akira
Setogawa after Setogawa showed up in a limousine at Armstrong's home.
However, the limousine driver, Michael Faulkner, whom Armstrong testified
at the contempt hearing witnessed Setogawa take the missing gold bars,
denied during a deposition that he ever saw Armstrong give any gold or
gold bars to Setogawa. The Temporary Receiver also submitted a signed*fn4
transcript of the examination of Nigel Kirwan, in a proceeding to which
the Receiver was not party, on which Armstrong relies to support his
assertion that Kirwan is holding the assets in trust and Armstrong has no
control over Kirman. Armstrong's counsel argued:
And if I could, your Honor, the only thing is to
comment on the Kirwan deposition, which [is] one of
the documents of the receiver relies upon — part
of the deposition that the receiver cites is that part
that talks about the assets being held in trust, that
Kirwan's holding certain assets in trust, in
Australia, and I don't see, even if Mr. Armstrong is
released, he's not traveling to Australia to recover
those assets and I don't think that Mr. Kirwan would
follow any particular order of Mr. Armstrong to
release those assets even if he had the power to ask
him to do so.
(Tr. at 30.) Kirwan's answers in this deposition, however, are some of
the strangest, most unbelievable, statements this Court has ever
encountered. Kirwan claims to be the trustee of two trusts with the same
name. (Kirwan Dep. at 89., attached as Ex.18 to Schiavoni Decl.) He
testified that one trust has a bank account in Switzerland, (Kirwan Dep.
at 91), but he does not know the name of the bank (id.) and does not have
any documents in Australia that show the identity of the bank (Id.)
despite his position as trustee. If such statements were not enough to
warrant dismissal of Kirwan's assertions in this examination, I observe
that Kirwan never acknowledges actually having the assets anywhere in the
transcript.
Put simply, there is no new evidence before me. Armstrong has provided
me, but mostly the Court of Appeals, nothing but self-serving and
conclusory statements that he does not have possession, custody or
control over the assets sought by the Temporary Receiver, but has come
forward with no hard evidence to substantiate this assertion. See
Rylander; 460 U.S. at 757-758, 103 S.Ct. 1548 (holding defendant does not
meet burden of production with an ex parte affidavit denying ability to
comply). Thus, he has not satisfied his burden of production.
Armstrong's remaining assertion is that he cannot comply, and cannot be
ordered to comply, with the Contempt Order because he is under indictment
in a parallel criminal proceeding. Armstrong argues that, even assuming
he had possession, custody or control of the missing corporate assets,
compliance with the Contempt Order violates his Fifth Amendment
privilege. This assertion must be disregarded on two grounds. First,
Armstrong has undeniably waived his Fifth Amendment privilege. He did so
on January 14, 2000 at the Contempt Hearing when he testified regarding
the factual circumstances surrounding the gold bars, the coins,
antiquities and bust of Julius Ceasar and, moreover, that he no longer
had possession of these items — all testimony I did not credit.
Regardless of my credibility
determination on these issues, had he wished to remain silent for fear of
self-incrimination at that time, he could have done so by asserting the
Fifth Amendment. His failure to do so operates as a waiver of the
privilege.*fn5 Second, Armstrong's mountain of papers do not support any
assertion of the Fifth Amendment. His current position, documented in an
affidavit attached to his counsel's papers of July 11, 2001, is that he
does not have possession, custody or control of the missing corporate
assets. If this is the case, the Fifth Amendment cannot be asserted in
good faith. In my effort to truly make an "individualized determination"
about the Contemnor and the circumstances surrounding his contempt. I
have reviewed the submissions and proceedings in the Second Circuit. Even
the Court of Appeals expressed disbelief regarding his Fifth Amendment
claim.*fn6 The following was the colloquy on the issue when the Circuit
reviewed the Contempt Order:
How does the Fifth Amendment issue arise — um,
if, um, if Mr. Armstrong's position is that he doesn't
have it? If he doesn't have any of these things,
well, isn't it idle to talk about whether
hypothetically it would be a violation of his Fifth
Amendment rights to turn them over? To assert a Fifth
Amendment right, wouldn't Mr. Armstrong have to say,
"I have it" and "I won't give it to you because of my
Fifth Amendment right?"
Well, arguably, he has testified that he has had the
assets and that he had given them to somebody else, an
argument that the ...