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United States v. Southland

April 18, 2006

UNITED STATES OF AMERICA,
v.
SEAN SOUTHLAND, DEFENDANT.



The opinion of the court was delivered by: Norman A. Mordue, Chief Judge

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Sean Southland, a defendant in the above-captioned action, was indicted on June 30, 2004, on a charge of conspiracy to distribute and possess with intent to distribute cocaine, in violation of 21 U.S.C. §§ 841, 846. The indictment also contained a forfeiture count alleging that a 2002 Mercedes Benz C240, in the name of Phoenician Automotive Group, Inc., was subject to forfeiture pursuant to 21 U.S.C. § 853(c). On November 29, 2004, Southland pled guilty to the charge of conspiracy alleged in the indictment and forfeited any interest he had in the Mercedes.

On January 28, 2005, the Court issued a Preliminary Order of Forfeiture regarding the Mercedes as property used to facilitate Southland's narcotics trafficking.

Following Southland's guilty plea and the Preliminary Order of Forfeiture, the government provided direct written notice to Harold Short, Jane Short, and Louis V. Ciardullo, Sr., all of whom filed petitions claiming an interest in the Mercedes. See 21 U.S. § 853(n)(2) (a third party may petition for a hearing to adjudicate his or her alleged interest in the property to be forfeited). Presently before the Court is the government's motion to dismiss the petitions pursuant to Fed. R. Crim. P. 32.2(c)(1)(A) for lack of standing. Alternatively, the government seeks dismissal of Ms. Short's and Mr. Short's petitions pursuant to Rule 32.2(c)(1)(B), which permits the filing of a motion for summary judgment following discovery.

THE PETITIONS

Louis V. Ciardullo, Sr.

Louis V. Ciardullo, Sr. claims in his petition to have a "claim superior to all other potential claimants for said vehicle." Mr. Ciardullo further avers:

Petitioner first met Sean Southland (Hereinafter 'Southland'), the Defendant in the criminal proceeding, in connection with one Canadian national named Charles McLaughlin (Hereinafter 'McLaughlin'). This occurred on or before 1 November 2002. Petitioner is asserting, in unrelated proceedings, that McLaughlin defrauded him of substantial sums. In an effort to recover a vehicle taken to Canada by

McLaughlin, Petitioner hired Southland to assist him. The vehicle was recovered and Southland was retained to assist with other matters, e.g., dealing with fraudulent credit card charges by McLaughlin, etc. As that work was winding down, Southland approached petitioner about helping him to start a used car business. After Petitioner decided to help, it was determined that the most tax effective way for Petitioner to be involved was to fund the start up business through Petitioner's retirement accounts. Southland incorporated a company known as Phoenician Automotive Group, Inc. which then sold bonds to Petitioner's IRA. The custodian of Petitioner's IRA was Morgan Stanley. Morgan Stanley would not agree to hold these assets, so a new account was created with the Onaga Trust Company of Onaga, Kansas acting as the custodian of the account. Petitioner transferred $100,000 to Onaga Trust Company who then purchased the bonds from Phoenician Automotive Group, Inc. Subsequently, Southland convinced Petitioner to fund a companion venture to sell custom brake systems. The new entity was known as Performance Brake Systems, Inc. and it also sold $100,000 worth of bonds to Onaga Trust Company as custodian for the IRA of Petitioner. Southland personally guaranteed the obligations of Performance Brake Systems, Inc.

No payments were ever made by Southland or any of his entities on the bonds. After learning of Southland's arrest, Petitioner retained counsel in Phoenix, Arizona and attempted a prejudgment attachment of any assets in the name of Southland, Phoenician Automotive Group, Inc. and Performance Brake Systems, Inc. No assets were recovered through this proceeding.

Although Petitioner has no proof, it appears that Southland used the proceeds from the sale of his corporate bonds to finance his criminal activities and not for any legitimate corporate ends. The writ of garnishment served by Petitioner on Bank of America in Phoenix was returned unsatisfied. In fact, the only asset that can be linked to the investment made by Petitioner is the subject vehicle.

While there are doubtless many other persons who have been harmed by Southland's actions, Petitioner asserts that only he can provide a direct link to the vehicle, given that it is titled in the name of Phoenician Automotive Group, Inc. ...


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