The opinion of the court was delivered by: Denise Cote, Usdj
On June 16, 2006, these four defendants were sentenced in the above-captioned matter. The Court ordered the forfeiture of proceeds and property as part of the sentences and announced that a written opinion would follow to explain its decision regarding forfeiture. This is that Opinion.
Background On September 12, 2005, a superceding indictment, Indictment S3 04 Cr. 1110 (DLC) (the "Indictment"), was returned with respect to fifteen defendants, including the four sentenced on June 16.*fn1 Counts One and Two of the Indictment charged these four defendants with violations of the RICO statute, 18 U.S.C. § 1962; Count Six charged all defendants with illegal gambling in violation of 18 U.S.C. § 1955; and Counts Twenty and Twenty-One charged defendant Alex Rudaj with bank fraud in violation of 18 U.S.C. § 1344.*fn2 The Indictment contained three forfeiture allegations relating to these five charges.
The first forfeiture allegation sought forfeiture of property related to the commission of the RICO violations. Specifically identified were (a) the defendants' interests in $5,755,000; (b) any interest of defendant Rudaj in 33-16 23d Avenue, Astoria, New York; and (c) any interest of defendant Nardino Colotti in 900 Morris Park Avenue, Bronx, New York. The second forfeiture allegation sought forfeiture of property relating to the violation of the gambling statute. Specifically identified were (a) $3,415,000, for which all defendants would be jointly and severally liable;*fn3 and (b) any interest of defendant Rudaj in 33-16 23d Avenue, the same property sought in the first allegation. Finally, the third forfeiture allegation sought the forfeiture of two properties derived from the proceeds of defendant Rudaj's fraudulent conduct, (a) 625 Crescent Avenue, and (b) 836 Morris Park Avenue, both in Bronx, New York.*fn4 The Government further announced its intention to seek substitute assets in the event that any of the specifically identified assets could not be forfeited. Following a roughly three-month trial, a jury convicted the defendants of all of the counts described above.
Shortly before the case was given to the jury, defendants agreed to submit to the Court the determination of whether the requisite nexus existed between the properties sought for forfeiture and the charged criminal conduct. A schedule was set after the verdict was announced for the submission of briefs relating to forfeiture issues. The schedule was later extended at the request of defense counsel. Counsel for defendant Rudaj submitted a brief and counsel for defendant Colotti submitted a letter expressing his desire to join in the arguments made by Rudaj's counsel. No other defendant challenged the propriety of forfeiture. After reviewing all of the parties' submissions, the Court requested further briefing on a few limited issues, including whether a hearing should be held as requested by Rudaj. The Government and Rudaj each submitted briefs.
Rudaj had argued, inter alia, that he should receive a setoff against the forfeiture for his down payment and any capital improvements he made to the properties purchased with the proceeds of the bank fraud. He did not, however, submit any documentation or affidavit or other evidentiary support for his claim that improvements had in fact been made. The Court granted Rudaj a further opportunity to provide any relevant documentation. At a conference held on Tuesday, June 20 the parties agreed to attempt to resolve their dispute regarding the size of any credit Rudaj would receive in relation to the bank fraud forfeiture. By June 22, the parties agreed that Rudaj would receive a credit of $262,613.40, thereby eliminating the last of the factual disputes between them. On June 30, the Government and Rudaj agreed to a stay of the order of forfeiture of the real property pending Rudaj's appeal of his conviction.
Rule 32.2, Fed. R. Crim. P., outlines the procedure for criminal forfeitures. After a verdict of guilty is returned on a count with respect to which the Government has sought criminal forfeiture, the court "must determine what property is subject to forfeiture under the applicable statute." Fed. R. Crim. P. 32.2(b)(1). When specific assets are sought, the court determines whether the Government "has established the requisite nexus between the property and the offense"; when a money judgment is sought, the court determines the appropriate amount of payment. Id. The issue of nexus for specific property may be submitted to the jury at the request of the defendant, id. at 32.2(b)(4), but all defendants in this case agreed to submit the issue to the Court. If the court finds that the property sought by the Government is subject to forfeiture, it must enter a preliminary order of forfeiture without regard to the interest of any third party in the property. Id. at 32.2(b)(2). The rights of third parties in specific assets may be considered at an ancillary proceeding that is not part of sentencing. Id. at 32.2(c).
Criminal forfeiture is "an aspect of sentencing." Libretti v. United States, 516 U.S. 29, 49 (1995). As with all fact-finding at sentencing, issues of fact relating to forfeiture must be established by a preponderance of the evidence. United States v. Bellomo, 176 F.3d 580, 595 (2d Cir. 1999); see also United States v. Fruchter, 411 F.3d 377, 384 (2d Cir. 2005) (same).
The RICO statute provides that a person convicted under Section 1962 "shall forfeit"
(1) any interest the person has acquired or maintained in violation of Section 1962;
(2) any interest in . . . or  property or contractual right of any kind affording a source of influence over[ the RICO enterprise]; and
(3) any property constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity.
18 U.S.C. § 1963(a). Forfeiture under the RICO statute is mandatory. See United States v. Corrado, 227 F.3d 543, 552 (6th Cir. 2000). In construing an identically worded statute, the Supreme Court explained that "Congress could not have chosen stronger words to express its intent that forfeiture be mandatory in cases where the statute ...