United States District Court, S.D. New York
April 14, 2004.
UNITED STATES OF AMERICA -against- PATRICK BENNETT, Defendant; and GWEN BENNETT, and ANDRICK IRREVOCABLE TRUST, Third-Party Claimants
The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge
OPINION AND ORDER
On October 20, 2003, Patrick Bennett, appearing pro se, moved for: (i)
mandatory Judicial Notice pursuant to Federal Rule of Evidence 201(d);
(ii) a hearing on the issue of whether the Government fulfilled its
obligation to recover proceeds from his crimes before it attempted to
forfeit substitute assets; and (iii) appointment of counsel to represent
him in the aforementioned motions. On November 3, 2003, Bennett wrote a
letter to the Court, seeking to: (i) vacate Judge Martin's Amended
Opinion and Order dated October 10, 2003; and (ii) vacate the Forfeiture Order pursuant to Rule 59(e). Bennett also requested
that the Court rule on his August 23, 2003 motion to recuse Judge Martin,
and Bennett's judicial notice motion. See Government's
Memorandum in Opposition to Patrick Bennett's Various Motions ("Gov't
Mem.") at 6. This opinion addresses each of these motions.
A. Patrick Bennett's Conviction and Sentencing
In 1997, Patrick Bennett was charged with criminal activity arising
from a massive fraud and money laundering scheme involving the Bennett
Funding Group, an office equipment leasing company run primarily by
Bennett and the Bennett Management and Development Corporation.
See Gov't Mem. at 2.
In March, 1999, a jury found Bennett guilty of two counts of conspiracy
to obstruct justice and commit perjury, one count of obstruction of
justice, and four counts of perjury. The jury failed to reach a verdict
on remaining counts. On June 10, 1999, after a retrial before Judge
Martin, a jury convicted Bennett of two counts of securities fraud, five
counts of bank fraud, thirty counts of money laundering, and five counts
of engaging in monetary transactions with criminally derived property. The jury also returned a special
verdict requiring Bennett to forfeit $109,088,889.11. See id.
On January 28, 2000, Judge Martin held a sentencing hearing concerning
Bennett's assets. On April 28, 2000, Judge Martin sentenced Bennett to 30
years of imprisonment followed by three years of supervised release, and
ordered him to forfeit $109,088,889.11 (the "Forfeiture").*fn2
B. Forfeiture Proceedings
On October 6, 2000, Judge Martin entered a First Amended Order of
Forfeiture against Bennett (the "Forfeiture Order"). The Order found that
Bennett had an ownership interest in two properties held in the name of
Gwen Bennett, Bennett's wife, and one property held in the name of the
Andrick Irrevocable Trust (the "Properties"). The Forfeiture Order vested
all of Bennett's rights to the Properties in the United States of America
and, pursuant to 18 U.S.C. § 982(b)(1), authorized the recovery of
any substitute assets necessary to complete the forfeiture. The
Forfeiture Order further provided that the court would enter a final
order of forfeiture pursuant to 21 U.S.C. § 853(n) "[u]pon
adjudication of all third-party interests." Gov't Mem. at 3-4, citing the
Forfeiture Order at 5. Bennett and Gwen Bennett opposed entry of the Forfeiture Order, raising some of
the same points addressed here. Judge Martin rejected each of their
arguments. See United States v. Bennett, No. 97 CR 639, 2000 WL
1505986, at *2 (S.D.N.Y. Oct. 6, 2000).
C. Bennett's Appeals
In 2000, Bennett appealed both his judgment of conviction and the
Forfeiture Order. On February 12, 2001, however, Bennett withdrew his
appeal of the Forfeiture Order and stipulated that the appeal would be
deemed "withdrawn with prejudice" should he fail to reinstate it within
thirty days. Bennett did not reinstate that appeal. See Gov't
Mem. at 4-5.
Bennett filed another appeal in 2002, again challenging his conviction,
his sentence, and the Forfeiture Order. Bennett asserted, among other
things, that the Forfeiture Order improperly authorized the recovery of
substitute assets because the Government did not first attempt to forfeit
the actual fruits of the crimes of which he was convicted. The Court of
Appeals affirmed Bennett's conviction and sentence, and rejected each of
his challenges to the Forfeiture Order. See United States v.
Bennett, No. 02-1379 (2d Cir. Sept. 19, 2003), slip op. at 4.
Although Bennett sought appellate review of this decision, on January 12,
2004, the Supreme Court denied his petition for certiorari. See
Bennett v. United States, U.S. , 124 S.Ct. 1112, No. 03-7654
D. The Ancillary Proceeding
On November 9, 2000, Gwen Bennett filed a Notice of Petition for a
hearing pursuant to 21 U.S.C. § 853(n)(2), contending that she had a
financial interest in the Properties. On February 6, 2001, Wanda Koen,
Trustee for the Andrick Irrevocable Trust, served a Notice of Petition
pursuant to 21 U.S.C. § 853(n), claiming that she also had an
interest in one of the Properties. On August 14 and 18, Judge Martin
conducted an ancillary hearing with respect to these third-party claims
(the "Ancillary Proceeding"). On September 24, 2003, Judge Martin issued
an Opinion and Order dismissing each claim. Though Gwen Bennett
subsequently filed additional motions in the Ancillary Proceeding
pursuant to Rule 59 and 60 of the Federal Rules of Civil Procedure, on
April 5, 2004, I issued an Opinion and Order denying Gwen Bennett's
motion. See United States v. Bennett, No. S1 97 Cr. 639, 2004
WL 736928, at *5 (S.D.N.Y. Apr. 5, 2004). II. DISCUSSION*fn3
A. Bennett Lacks Standing to Assert These Motions
The Government contends that Bennett lacks standing to make substantive
motions in the Ancillary Proceeding because his rights to the Properties
were fully adjudicated and are now vested in the Government. Bennett
responds that he has standing because: (1) no final order of forfeiture
has been entered against him, and (2) his sentence has not been finally
A defendant lacks standing to make substantive motions in a forfeiture
proceeding ancillary to his criminal case where he has lost his interest
in the properties at issue. The statute allowing for participation in
such ancillary proceedings provides that "[a]ny person, other than
the defendant, asserting a legal interest in property which has been
forfeited to the United States pursuant to this section may . . .
petition the court for a hearing to adjudicate the validity of his
alleged interest in the property." 21 U.S.C. § 853(n)(2) (emphasis
added). "The Order of Forfeiture acts to divest the defendant of any
remaining interest in the property."United States v. Pellulo,
178 F.3d 196, 202 (3d Cir. 1999) (holding that the defendant's prior forfeiture order removed his interest in his
Bennett is precluded from requesting a hearing because the Forfeiture
Order expressly divested him of any interest in the Properties. The
Forfeiture Order provides:
All of PATRICK R. BENNETT'S right, title and
interest in and to all of the assets, whether
real, personal and/or mixed, is hereby vested in
the United States of America, pursuant to
18 U.S.C. § 982(a)(1), as property traceable to
money laundering in violation of
18 U.S.C. § 1956, and/or as substitute assets pursuant to
18 U.S.C. § 982(b)(1)(incorporating, inter
alia, 21 U.S.C. § 853(p)).*fn4
Forfeiture Order at 3-4.
Bennett asserts that he retains standing to sue in the Ancillary
Proceeding because no final order of forfeiture has been entered and
because his sentence, of which the Forfeiture Order is a part, has not
been fully adjudicated. Bennett is wrong on both counts. Although no
final order or forfeiture has been entered as to third-party claimants,
the Forfeiture Order is final as to him. "A forfeiture order, whether
preliminary or final as to third-party claims, is a final order as to the
defendant." United States v. Christunas, 126 F.3d 765, 769 (6th Cir. 1997). In addition, because the Supreme Court has denied
Bennett's petition for certiorari, his sentence is now final. See
Bennett v. United States, 124 S.Ct. 1112, No. 03-7645 (2004).
Accordingly, Bennett lacks standing to bring any substantive motions in
the Ancillary Proceeding.
B. This Court Lacks Jurisdiction to Consider Bennett's Claims
Even assuming, arguendo, that Bennett has standing to bring
his motions, this Court lacks jurisdiction to hear them. Following an
order of forfeiture levied as part of a criminal sentence, a district
court must hold an ancillary proceeding if "a third party files a
petition asserting an interest in the property to be forfeited" so long
as the forfeiture does not consist solely of a money judgment.
Fed.R.Crim.P. 32.2(c)(1). Accordingly, a district court retains jurisdiction
to consider third-party claims in such a proceeding. See
21 U.S.C. § 853(n) (providing a means for third parties to obtain their
property if it has been forfeited). The district court does not,
however, retain jurisdiction over matters arising out of the criminal
sentence once that sentence is appealed. "Although the district court
has jurisdiction to consider third party claims to property . . .
after a notice of appeal is filed, the district court lacks jurisdiction
to consider a defendant's claims." United States v. Libretti,
38 F.3d 523, 527 (10th Cir. 1994); see also Berman v. United
States, 302 U.S. 211, 214 (1937) (finding that the district court lost jurisdiction to modify its sentence upon appeal
of that sentence).
This Court lost jurisdiction over matters regarding Bennett's criminal
case upon Bennett's appeal to the Second Circuit. See United States
v. Bennett, No. 02-1379 (2d Cir. Sept. 19, 2003) (affirming
Bennett's sentence and rejecting many of the arguments regarding the
Forfeiture Order raised in the instant motions). The Court's remaining
jurisdiction is limited to considering third-party claims in the
ancillary proceeding pursuant to 21 U.S.C. § 853(n).*fn5
C. Bennett's Motions Are Without Merit
Finally, and briefly, even if Bennett had standing and this Court had
jurisdiction, each of Bennett's motions lacks merit.
1. Motion for Judicial Notice
Bennett demands that the Court take judicial notice of various "facts."
Under Federal Rule of Evidence 201(d), a court must take judicial notice,
upon a party's request, of certain facts. Rule 201(b) provides that a
court may take judicial notice of a fact when the fact is "not subject to
reasonable dispute in that it is either (1) generally known within the
territorial jurisdiction of the trial court or (2) capable of accurate
and ready determination by resort to sources whose accuracy cannot
reasonably be questioned." F.R.E. 201(d). When considering whether to
take judicial notice pursuant to Rule 201(b), courts rarely go beyond the
record unless the facts in question are of common knowledge or are
capable of certain verification. See Alvery v. United States,
302 F.2d 790, 794 (2d Cir. 1962) (citing Brown v. Piper,
91 U.S. 37, 42 (1875)).
Bennett asks this Court to take judicial notice of, inter
alia, what his testimony would have been in the Ancillary Proceeding
had he provided it. The Federal Rules of Evidence do not provide any
basis for taking judicial notice of such extra-record information, as it
is neither a matter of common knowledge, certain of verification,
generally known within the jurisdiction, nor capable of accurate and
2. Motion for a Hearing on Whether the Government Appropriately
Forfeited Substitute Assets
Bennett requests a hearing to determine whether the Government inappropriately forfeited substitute assets before determining
whether assets available from the criminal enterprise were sufficient to
cover the mandated amount. No such hearing is necessary. As an initial
matter, it is not entirely clear that the Properties were forfeited as
substitute assets rather than as property traceable to the crimes.
Specifically, in the Forfeiture Order, Judge Martin determined that the
Properties were subject to forfeiture "as property traceable to money
laundering in violation of 18 U.S.C. § 1956 and/or as
substitute assets pursuant to 18 U.S.C. § 982(b)(1). Forfeiture Order
at 3-4 (emphasis added). Moreover, the Forfeiture Order, levied following
a hearing pursuant to United States v. Fatico, 57 F.2d 707 (2d
Cir. 1978), expressly provides that the Government was not able to locate
assets that equaled the full sum of the forfeiture. "[A]s a result of
acts and omissions of the defendant, the Government, upon exercise of due
diligence, has been unable to locate said $109,088,889.11." Forfeiture
Order at 3. The Forfeiture Order has since been affirmed by the Second
Circuit Court of Appeals.*fn7 3. Motion for Appointment of Counsel
Bennett further requests appointment of counsel for assistance with
these motions. As discussed, Bennett lacks standing to bring these
motions, the Court lacks jurisdiction to hear them, and they are entirely
without merit. Additionally, as Bennett is already represented by counsel
in his pending habeas proceeding his only remaining recourse for
these matters he has neither the right to, nor the need for,
appointed counsel with respect to these motions.
4. Motion to Recuse Judge Martin
Bennett also requests recusal of Judge Martin, but this issue is moot.
Judge Martin is no longer a federal judge and no longer presides over any
case in which Bennett is a party.
5. Motion to Vacate Judge Martin's Amended Opinion and Order dated
October 20, 2003 and His Preliminary Order of Forfeiture Pursuant to Fed.
R. Civ. P. 59(e)
As discussed earlier, Bennett lacks standing to bring these motions and
the Court lacks jurisdiction to hear them. Additionally, Bennett seems to
have withdrawn his "Rule 59(e)" motion: "Patrick Bennett requests the
Court to re construe (sic) this Motion as one for further Judicial Notice
of the facts contained within . . ." Response Mem. at 12.
For the foregoing reasons, each of Bennett's motions is denied. The
Clerk of the Court is directed to close these motions [docket #218].