United States District Court, S.D. New York
April 7, 2005.
GATEX CORPORATION (Account #9008295) Petitioner,
THE UNITED STATES OF AMERICA, Respondent. HARBER CORPORATION (Account #9006556) Petitioner, v. THE UNITED STATES OF AMERICA, Respondent. PIEDADE PEDROM DE ALMEIDA (Account #8200875) Petitioner, v. THE UNITED STATES OF AMERICA, Respondent. MABON CORPORATION (Account #9007663) Petitioner, v. THE UNITED STATES OF AMERICA, Respondent.
The opinion of the court was delivered by: P. KEVIN CASTEL, District Judge
MEMORANDUM AND ORDER
The petitioners in these actions maintained bank accounts with
The Merchants Bank of New York ("Merchants"), located in this
District at 275 Madison Avenue. (De Almeida Pet. ¶ 6; Gatex Pet.
¶ 6; Harber Pet. ¶ 6; Mabon Pet. ¶ 6). On June 27, 2002, each of
their accounts was seized in connection with the arrest of
Carolina Nolasco, a Merchants employee. (De Almeida Pet. ¶ 15;
Gatex Pet. ¶ 13; Harber Pet. ¶ 13; Mabon Pet. ¶ 15) Nolasco was
arrested and charged with eight criminal counts in the United
States District Court for the District of New Jersey, including
assisting a bank customer to evade federal banking regulations.
There is no contention that the petitioners engaged in criminal
conduct, or were knowledgeable about or liable for any criminal
The petitioners filed separate actions asserting that pursuant
to its general equity jurisdiction and Rule 41(g), Fed.R. Crim.
P., this Court should order the return of the petitioners' seized
funds. In motion papers that are nearly identical as to each
petitioner, the government moves for the dismissal of the
above-captioned actions. The government contends that this Court
lacks subject matter jurisdiction over these petitions because a
separate, parallel avenue of relief is available to the
petitioners in the District of New Jersey. For the reasons
explained below, the respondent's motions are granted.
Jurisdiction is premised under 28 U.S.C. §§ 1331, 1355, and
1367. Petitioners assert that venue is proper pursuant to
28 U.S.C. § 1391(b), because the underlying events arose in this
District, and that the property disputed in this action was seized in this District. In asserting subject matter
jurisdiction, petitioners rely on the text of Rule 41(g),
Fed.R.Crim.P., which states:
A person aggrieved by an unlawful search of seizure
of property or by the deprivation of property may
move for the property's return. The motion must be
filed in the district where the property was seized.
The court must receive evidence on any factual issue
necessary to decide the motion. If it grants the
motion, the court must return the property to the
movant, but may impose reasonable conditions to
protect access to the property and its use in later
"Federal Rule of Criminal Procedure 41(g) permits a person
aggrieved by the government's unlawful seizure or deprivation of
property to move for specific relief: the property's return."
Adeleke v. United States, 355 F.3d 144, 149 (2d Cir. 2004). "A
Rule 41(e) [now Rule 41(g)] movant or any criminal defendant `is
presumptively entitled to the return of his property once it is
no longer needed as evidence.'"*fn1 Viola v. United
States, 2003 WL 21143078, at *2 (E.D.N.Y. Jan. 29, 2003)
(quoting Lavin v. United States, 299 F.3d 123, 127 (2d Cir.
2002)). "[W]here no criminal proceedings against the movant are
pending or have transpired, a motion for the return of property
is treated as [a] civil equitable proceeding ? even if styled as
being pursuant to Fed.R. Cr. P. 41(e)." Mora v. United States,
955 F.2d 156, 158 (2d Cir. 1992) (alteration in original;
The government bases its motions on the availability of
forfeiture proceedings pursuant to 21 U.S.C. § 853(n)(2). Section
982(b)(1) of Title 18 states that forfeiture proceedings "shall
be governed by" 21 U.S.C. § 853. Section 853(n)(2) states: Any person, other than the defendant, asserting a
legal interest in property which has been ordered
forfeited to the United States pursuant to this
section may, within thirty days of the final
publication of notice or his receipt of notice under
paragraph (1), whichever is earlier, petition the
court for a hearing to adjudicate the validity of his
alleged interest in the property. The hearing shall
be held before the court alone, without a jury.
Section 982(b)(1) of Title 18 states that forfeiture proceedings
"shall be governed by" 21 U.S.C. § 853.
On December 13, 2004, the Hon. Joseph A. Greenaway, U.S.D.J.,
issued an order captioned "Consent Judgment and Preliminary Order
of Forfeiture" in the related criminal case, United States v.
Nolasco, 04 Cr. 617 (D.N.J.). (attached at Mabon, D'Orazio
Dec. Ex. E) The order stated that a total of $21,095,238.53 in
United States currency had been seized, that "the United States
is now entitled to possession of the herein described assets,"
and that the currency is "hereby forfeited to the United States
of America for disposition in accordance with the law, subject to
the provisions of 18 U.S.C. § 982." (Order at 2) The government
previously entered into a plea agreement with Nolasco, dated
October 1, 2004. (attached at Mabon, D'Orazio Dec. Ex. F)
Therefore, the question relevant to this motion is whether the
underlying criminal proceedings in the District of New Jersey and
the forfeiture proceedings commenced therein affect this Court's
jurisdiction over the petitioners' claims.
Then-District Judge Miner observed in Application of Campola,
543 F. Supp. 115, 117 (N.D.N.Y. 1982), that jurisdiction under
Rule 41 "`is to be exercised with great restraint and caution
since it rests upon the court's supervisory power over the
actions of federal law enforcement officials.'" (quoting Fifth
Avenue Peace Parade Committee v. Hoover, 327 F. Supp. 238
(S.D.N.Y. 1971), aff'd, 480 F.2d 326, cert. denied,
415 U.S. 948 (1974)). Campola cautioned that Rule 41 jurisdiction should
be exercised in accordance with "familiar limitations on the
granting of equitable relief." Id. (quotation marks omitted).
In an opinion that considered facts similar to those here,
Judge Stanton found no subject matter jurisdiction under Rule 41.
The petitioner in Motion for Return of All Monies Seized from
Account 710707 at American Express Bank, 1991 WL 183363, at *1
(S.D.N.Y. Sept. 11, 1991), moved pursuant to Rule 41(e) and the
court's equitable powers for the return of money that the
government seized from petitioner's bank accounts. After the
petition was filed, the government notified the court that it had
initiated administrative forfeiture proceedings, and argued that
petitioner must seek relief in that proceeding, not through a
Rule 41 motion. Id. "While the Second Circuit has not decided
the issue, the weight of authority supports the Government's
position." Id. (collecting cases). Judge Stanton was persuaded
that the government commenced a forfeiture proceeding within a
reasonable window of time after the seizure, and that because the
"legal remedy in the forfeiture proceeding appears adequate, the
equitable remedy under Rule 41(e) is not required." Id. at *2.
See also Application of Herr, 473 F. Supp. 1304 (S.D.N.Y.
1979) (declining jurisdiction over Rule 41 motion brought by
criminal defendant who had a case pending in Central District of
True, the Second Circuit does not appear to have spoken on the
existence of subject matter jurisdiction over a Rule 41 motion
when a related criminal proceeding is commenced in a separate
judicial district. It has, however, ruled that there is no
subject matter jurisdiction when a petitioner seeks money damages
from the government pursuant to Rule 41(g), Adeleke,
355 F.3d at 150-51, and when a petitioner seeks Rule 41 relief
simultaneous to a parallel administrative proceeding before the
United States Drug Enforcement Agency, U.S. (Drug Enforcement Agency) v. One 1987
Jeep Wrangler Automobile VIN No. 2BCCL8132HBS12835,
972 F.2d 472, 479 (2d Cir. 1992). The Second Circuit also has held that a
district court "had jurisdiction to hear the Rule 41(e) motion
for return of property despite its being brought on after the
conclusion of criminal proceedings in a different district than
that in which the property was seized." United States v.
Giovanelli, 998 F.2d 116, 118 (2d Cir. 1993) (emphasis added).
In addition, as noted by Judge Stanton in Motion for Return of
All Monies Seized from Account 710707, the weight of authority
from other circuits supports the government's position. 1991 WL
183363, at *1 (citing, inter alia, U.S. v. Price,
914 F.2d 1507, 1511 (D.C. Cir. 1990) (per curiam); Shaw v. U.S.,
891 F.2d 602, 603-04 (6th Cir. 1989)).
In the present case, Judge Greenaway has already ruled that the
seized accounts are to be "forfeited to the United States of
America for disposition in accordance with the law, subject to
the provisions of 18 U.S.C. § 982." (Order, Dec. 13, 2004, at 2)
Judge Greenaway also has set forth procedures for providing
notice to those persons or entities whose property may have been
seized as part of Ms. Nolasco's prosecution, and set forth
certain procedures by which those persons or entities may
petition for the property's return. (Id. at 2-3) An exhibit to
Judge Greenaway's order sets forth certain funds seized,
including $2,674,835.39 from Gatex Corporation, Account #
9008295; $1,698,878.23 from Harber Corporation, Account #
9006556; $809,953.88 from Mabon Corporation, Account # 9007663;
and $475,607.10 from Piedade Pedro Almeida, Account # 8200875.
(Id. at 4)
If this Court were to retain jurisdiction over the petitioners'
actions under Rule 41, it would inevitably lead to duplicative
and parallel resolutions. The District of New Jersey has set forth a legal process by which these
petitioners can pursue the relief that they seek in this action.
While there may well be circumstances in which the equities weigh
in favor of retaining jurisdiction in the District where the
property, in spite of the commencement of a related criminal
action elsewhere, such a circumstance cannot be found here, when
Judge Greenaway has explicitly set forth a procedure through
which the petitioners may attain the relief that they seek.
Moreover, a review of the petitioners' submissions,
particularly the memorandum of law submitted by the Mabon
Corporation, shows that retaining jurisdiction over petitioners'
claims would force this Court to review and potentially
second-guess legal determinations made in the District of New
Jersey. Mabon argues, among other things, that in the criminal
proceeding, the government has misread 18 U.S.C. § 1960, which
prohibits operating an unlicensed money-transmitting business.
Mabon posits that the alleged misinterpretation of section 1960
calls into question the applicability of 18 U.S.C. § 982, the
very provision that formed the basis for the Order of December
13, 2004. The risk of inconsistent adjudications of rights in the
same property militates against exercising jurisdiction in this
The government's motion to dismiss for lack of subject matter
jurisdiction is granted. The Clerk is directed to dismiss the
petitions in 04 Civ. 3729, 04 Civ. 3730, 04 Civ. 8594, and 04
Civ. 8595, and to enter judgment for the respondent.