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United States v. Jennings

June 25, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
KEITH JENNINGS DEFENDANT.



The opinion of the court was delivered by: Thomas J. McAVOY Senior United States District Judge

DECISION and ORDER

I. INTRODUCTION

The law firm of Baach, Robinson & Lewis PLLC filed a petition pursuant to 21 U.S.C. § 853(n)(2) seeking $4,139.10 of the substitute property that is the subject of the Court's Supplemental and Amended Preliminary Order of Forfeiture. The law firm claims entitlement to these funds for representing Jennings in a civil action. Currently before the Court is the government's motion to dismiss the petition pursuant to 21 U.S.C. § 853(n)(6)(A) and (B) contending that Petitioner lacks standing to contest the forfeiture.

II. FACTS

On March 17, 1999, a jury in the United States District Court of the Northern District of New York convicted Keith Jennings of engaging in a criminal enterprise, narcotics conspiracy, money laundering, and possession with intent to distribute controlled substances. He was also convicted on a special forfeiture count in the amount of $1.5 million. On August 3, 1999, United States District Judge Howard G. Munson issued a Preliminary Order of Forfeiture imposing a $1.5 million money judgment liability on Jennings and directing him to forfeit his personal property to partially satisfy this judgment. Pursuant to § 853(n)(1), notice of the forfeiture order was published in a newspaper of general circulation in Syracuse, New York, once a week for three consecutive weeks. (Mot. to Dismiss Ancillary Petition, Boykin Aff. ¶ 5).

In or about April 2, 2004, in a separate action in the District Court for the District of Columbia, Jennings challenged the validity of the Drug Enforcement Administration's administrative forfeiture of $17,071. See Jennings v. U.S. Dep't of Justice, No. 3 Civ. 1309 (D. D.C. Feb. 23, 2005). That action sought the recovery of $17,071 in cash seized from Jennings during a stopover at Atlanta's Hartsfield-Jackson International Airport on January 7, 1998. The District Court for the District of Columbia appointed Michael J. Zoeller from the law firm of Baach, Robinson & Lewis PLLC to represent Jennings in that action. (See Decl. of Michael J. Zoeller ¶ 2). The law firm entered into a retainer agreement with Jennings to represent him pro bono. Id. ¶ 3; see also id., Pet. Ex. C. In this retainer agreement, Jennings agreed to pay the law firm's costs from the proceeds of any award that he might obtain. Id., Pet. Ex. C.

Learning of the D.C. action, on January 12, 2005 the Government made an application in the District Court for the Northern District of New York to substitute assets. Specifically, the Government sought the disputed $17,071 to partially satisfy the outstanding $1,500,000 forfeiture money judgment against Jennings.

On February 23, 2005, the District Court for the District of Columbia granted summary judgment to Jennings and directed the return of the $17,071 to Jennings.

However, the Court stayed the return of these funds to Jennings pending a decision by Judge Munson regarding the Government's motion to substitute assets. On April 4, 2005, Judge Munson granted the Government's application to substitute assets and issued a Supplemental and Amended Preliminary Order of Forfeiture. (Supp. Amended Preliminary Order of Forfeiture (No. 791)).

On May 12, 2005, Baach, Robinson & Lewis PLLC filed an ancillary petition pursuant to 853(n)(2) seeking $4,319.10 from the disputed $17,071 as compensation for its pro bono representation of Jennings. The law firm claims an interest similar to that of a bona fide purchaser under 21 U.S.C. § 853(n)(6)(B) in $4,319.10 of the disputed $17,071. (Pet. Resp. to U.S. Motion to Dismiss Pet. at 3 (No. 821)). The law firm argues that it "purchased" an interest when Mr. Jennings signed a retainer agreement consenting to pay the law firm's costs from any award that he might receive as a result of their legal services. Id. The law firm further contends that the Government may not recover the law firm's share of the $17,071 because the money is only substitute assets to satisfy Jennings's outstanding $1,500,000 money judgment under 21 U.S.C. § 853(p) and is not proceeds of a criminal enterprise. Relying on United States v. Nava, 404 F.3d 1119 (9th Cir. 2005), the law firm argues that in forfeiting substitute assets, the Government may only recover Jennings's interest and not the interest of innocent parties. (Pet. for Hearing on Forfeiture of Property, at 4 (No. 805)).

The Government moves to dismiss the petition pursuant to 21 U.S.C. § 853(n)(6)(A) and (B). The Government argues that the law firm is a general creditor of Jennings and does not have standing to contest the forfeiture of $17,071. (Mot. to Dismiss, at 16 (No. 817)).

III. DISCUSSION

The criminal forfeiture statute at issue in this case, 21 U.S.C. § 853, is applicable in all felony drug cases and requires the forfeiture of "any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation."

21 U.S.C. § 853(a)(1). Title to forfeited property vests in the U.S. Government "upon the commission of the act giving rise to forfeiture. . . ." 21 U.S.C. § 853(c). Subsection 853(p)*fn1 permits the Government to secure substitute assets to satisfy a forfeiture judgment, including a money judgment. See United States v. Candelaria-Silva, 166 F.3d 19 (1st Cir. 1999); United States v. Numisgroup Intl. Corp., 169 F. Supp. 2d 133 (E.D.N.Y. 2001); United States v. Davis, 2001 WL 47003 (S.D.N.Y. 2001).*fn2 By their ...


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