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United States v. Fisher

United States District Court, W.D. New York

June 28, 2017




         The Defendant, Georgina Fisher, is charged with eight counts of structuring, in violation of 31 U.S.C. § 5324(a)(1). She has made a number of arguments for dismissal, based primarily on the Government's conduct before the grand jury, as well as the Government's efforts to forfeit her home in the event of a conviction. In a previous Decision and Order (the “December 2016 Decision and Order, ” Docket No. 149), the Court declined to adopt Magistrate Judge Scott's Report and Recommendation (Docket No. 107) to the extent it recommended dismissing the superseding indictment for alleged grand jury misconduct. The Court noted, however, that “Judge Scott identified the Sixth Amendment as an alternate ground for dismissal.” Docket No. 149 at 16. Thus, the Court requested additional briefing on whether Fisher's motion to dismiss on Sixth Amendment grounds had any continuing validity in light of the Court's December 2016 Decision and Order.

         As discussed below, the Court assumes for purposes of this Decision and Order that the Government's conduct-namely, seeking to protect its claimed interest in Fisher's home-violated the Sixth Amendment's Counsel Clause. At bottom, however, that assumed violation resulted from advocating the incorrect (but reasonable) legal position that Fisher's home is, in its entirety, subject to forfeiture. Thus, the most appropriate remedy for the assumed violation would be to direct the Government to lift its lis pendens on Fisher's home so that she could access her home equity and fund her defense. But the Government lifted its lis pendens long ago. And Fisher has not shown how the more drastic remedy she seeks-dismissal-is necessary to “restore [her] to the circumstances that would have existed had there been no constitutional error.” United States v. Stein, 541 F.3d 130, 144 (2d Cir. 2008) (quotation marks and brackets omitted). Fisher has, therefore, not shown that she is entitled to dismissal for an alleged Sixth Amendment violation.


         The Court assumes familiarity with its December 2016 Decision and Order, which detailed the grand jury proceedings in this case, and which rejected Fisher's argument that the AUSA's conduct before the grand jury required dismissal. The Court also assumes familiarity with this case's lengthy and complicated procedural history. That procedural history is central to Fisher's motion to dismiss on Sixth Amendment grounds. The Court has carefully reviewed the record and, therefore, only briefly summarizes those parts of the record that are relevant to Fisher's Sixth Amendment claim.

         Fisher, as noted, is charged with eight counts of causing a financial institution to fail to file transaction reports-i.e., structuring-in violation of 31 U.S.C. § 5324(a)(1). The superseding indictment alleges that Fisher structured $74, 000 in money orders over a ten-day period.

         The basis for Fisher's Sixth Amendment claim is the superseding indictment's forfeiture allegation, as well as the Government's efforts to defend that allegation and the lis pendens it placed on Fisher's home.[1] The forfeiture allegation states that, in the event of a conviction, the Government will seek forfeiture in the form of a $74, 000 money judgment, as well as real property located at Theresa Lane, in Niagara Falls, New York. See Docket No. 20 at 10 (Superseding Indictment). That property is titled in Fisher's name. Id. As the Government proffered before Judge Scott (Docket No. 34 at 7:9 - 9:13), and as the investigating IRS Special Agent testified before the grand jury (A-97:9 - A-99:16), the Government claims that Fisher purchased over $300, 000 in structured money orders, which she used to pay off her mortgage. Fisher then, according to the Government, took out a line of credit secured by her home, used the line of credit to buy the Theresa Lane home, sold her first home, and used the proceeds to pay off the line of credit.

         The superseding indictment alleges, and the Government maintains, that in the event of a conviction the Theresa Lane property is forfeitable pursuant to 31 U.S.C. § 5317(c)(1)(A). See Docket No. 20 at 10; Docket No. 29 at 6-8; Docket No. 60 at 4-5. The parties strenuously disagree, however, over the degree (if any) to which the Theresa Lane property is subject to forfeiture. This is because a significant portion of Fisher's alleged structuring was barred by the statute of limitations. Thus, although the Government presented the grand jury with evidence that Fisher structured over $300, 000 in money orders (which, according to the Government, she ultimately used to purchase the Theresa Lane property), the superseding indictment, as noted, alleges that Fisher structured only $74, 000 in money orders.

         The Government's efforts to protect its interest in the Theresa Lane property began when the Government filed a notice of lis pendens on the property, two weeks after the grand jury handed up the original indictment. See Docket No. 7.[2]

         After an exchange of letters between the AUSA and Fisher's counsel regarding Fisher's desire to use her equity in the Theresa Lane property to fund her legal defense-an effort the Government stated it would oppose-Fisher filed a motion seeking a hearing pursuant to United States v. Monsanto, 924 F.2d 1186 (2d Cir. 1991) (en banc). See Docket No. 21. In Monsanto, the Second Circuit “concluded that the Fifth and Sixth Amendments entitle a presumably innocent criminal defendant to an adversarial, pre-trial hearing to address two questions: (1) whether there is probable cause to believe that the defendant committed the crimes providing a basis for forfeiture; and (2) whether there is probable cause to believe that the properties are properly forfeitable.” United States v. Bonventre, 720 F.3d 126, 130 (2d Cir. 2013) (citing Monsanto, 924 F.2d at 1203).

         The Government opposed Fisher's Monsanto motion for two reasons. First, the Government argued, Fisher had not shown that she lacked funds with which she could fund her defense. See Docket No. 29 at 8-10. And second, the Government argued that Fisher had not shown that “there is a bona fide reason to believe that the grand jury or the court erred in finding probable cause to believe the [Theresa Lane] property was subject to forfeiture.” Id. at 10. The Government also argued that Fisher could not prove that the Theresa Lane property was untainted because, according to the Government, “she fail[ed] to provide any explanation surrounding any and all of the financial activities that led to, are traceable to[, ] and were involved in the purchase of the Theresa Lane property.” Id. at 12.

         Fisher replied that, contrary to the Government's suggestion, neither her husband nor her mother would fund her defense (Docket No. 31 at 10); that, absent a home equity loan, she lacked sufficient funds to pay for her defense, id.; and that she had a “bona fide reason to believe that the grand jury erred in finding probable cause to believe the [Theresa Lane] property was subject to forfeiture.” Id. As to her last argument, Fisher noted that the superseding indictment alleged that she had structured $74, 000. But, she argued, that allegation did not justify forfeiture of both a $74, 000 money judgment and the entire approximate $170, 000 value of the Theresa Lane property. Id. at 10-11.

         The parties appeared before Judge Scott for oral argument on June 9, 2015. Among other things, the AUSA gave Judge Scott a brief summary of the evidence presented to the grand jury as to the structuring charges, as well as how Fisher's alleged structuring is traceable to the Theresa Lane property. Docket No. 34, Tr. 6:9 - 9:13. Fisher again replied that the superseding indictment alleged only $74, 000 in structuring-not the more than $300, 000 alleged by the Government. Tr. 11:22 - 12:13. Addressing this argument, the AUSA responded that, although the superseding indictment alleged only $74, 000 in structuring, “[t]he overall relevant conduct is something that we're going to ask the sentencing court to consider in the event of a conviction.” Tr. 20:1-3. Moreover, the AUSA argued, the Government's lis pendens was intended to “preserv[e] [the Government's] interest in that property in the event [the Defendant] is convicted, ” at which time the Government would “turn to the issue of whether or not the property, Theresa Lane, is involved in or traceable to her criminal activity.” Tr. 21:10-14. See also Tr. 28:10-14 (“We would have a relevant conduct hearing showing that this conduct began before what's set forth in the indictment. It was a pattern. It was a scheme and, accordingly, that it involved $300, 000.”)

         Several weeks later, Judge Scott filed an order finding that Fisher was entitled to a Monsanto hearing. Docket No. 37. Relying on the Second Circuit's decision in United States v. Bonventre, 720 F.3d 126 (2d Cir. 2013), Judge Scott concluded that Fisher had met the low burden necessary to warrant a hearing. See Id. at 3 (quoting Bonventre's holding that the Second Circuit “do[es] not believe that the defendant must make a formal prima facie showing that the funds were illegitimately restrained . . . beyond providing a basis for bringing a motion for a Monsanto or Monsanto-like hearing in the moving papers”).

         The Government appealed Judge Scott's order. See Docket No. 41. At the Government's request, Judge Scott stayed the Monsanto hearing until this Court resolved the Government's appeal. See Docket Nos. 47 & 48. Shortly after oral argument, the Court summarily affirmed Judge Scott's order. Docket No. 51.

         Two days before the scheduled Monsanto hearing, the Government filed a pre-hearing brief stating that it intended to proceed at the hearing by proffer. See Docket No. 54 at 3. That same day, the Government also moved for reconsideration of Judge Scott's Monsanto order in light of United States v. Cosme, 796 F.3d 226 (2d Cir. 2015), which the Second Circuit had decided eight days earlier. See Docket No. 55. The Government argued that Cosme stood for the proposition that, “where a probable cause finding relative to forfeiture has already been made, i.e., by the grand jury, the defendant is not entitled to a Monsanto hearing.” Id. at 2. The Government concluded that, “[i]n voting on the indictment in th[is] case . . . the grand jury also voted on the forfeiture allegations. As such, there has been a finding of probable cause to believe that the assets in dispute are traceable or otherwise sufficiently related to the crimes charged in the indictment.” Id. at 3-4. Thus, the Government argued, based on both the Supreme Court's decision in Kaley v. United States, 134 S.Ct. 1090 (2014), and the Second Circuit's decision in Cosme, Fisher was not entitled to a Monsanto hearing.

         Judge Scott denied the Government's motion for reconsideration the next day. See Docket No. 56. In his Decision and Order, Judge Scott distinguished Cosme and concluded that the Government's motion for reconsideration “is a total non-sequitur whose only purpose is to delay Fisher's Monsanto hearing further.” Id. at 4.

         Fisher then responded to the Government's pre-hearing brief, arguing primarily that a Monsanto hearing must be an adversarial one “limited” to the question “whether the government can establish probable cause of a factual nexus between [the charges in the superseding indictment] and Ms. Fisher's entire home.” Docket No. 57 at 2. Fisher also argued that there was no merit to either of the theories by which the Government claimed the ability to forfeit the entire Theresa Lane property in the event of a conviction. Id. at 4.

         At the Monsanto hearing, the Government began by noting that it had moved for reconsideration in light of Cosme after “review[ing] [the case] with appellate counsel in our office, with the forfeiture people.” Docket No. 59 Tr. 3:13-15. In an effort to “cut through this, ” Judge Scott then asked the AUSA whether it was her position “that the grand jury was actually presented the question whether there was probable cause, there was a nexus between the activity and the assets?” Tr. 5:12-17. The AUSA responded that “the nexus between the property sought to be forfeited and the crimes charged was presented to the grand jury. I was the person who presented the evidence in the grand jury and as an officer of the court I made the representation that that evidence, the connection . . . between Theresa Lane and the structuring of the money orders was presented to the grand jury.” Tr. 6:9-20. Judge Scott and the AUSA then discussed the proper interpretation and impact of Cosme, after which the AUSA volunteered to provide Judge Scott with the relevant portions of the grand jury transcripts for his in camera review. Tr. 9:6-8.

         After further argument about whether the grand jury was instructed “[o]n nexus, ” Tr. 14:11, Judge Scott concluded that he would review the grand jury transcripts in camera to determine “whether that was presented the grand jury.” Tr. 17:15. After the hearing, the parties filed supplemental briefs addressing questions raised at the hearing, and the Government filed transcripts of the grand jury proceedings for Judge Scott's in camera review.

         Several weeks later, Judge Scott filed a Decision and Order (Docket No. 64) addressing arguments made both at the hearing and in the parties' post-hearing briefs. In addition, Judge Scott sua sponte disclosed “points of information” found in the grand jury transcripts, which he believed were “pertinent to the ongoing issues in this case.” Id. at 9. Specifically, Judge Scott provided a four-page summary of certain aspects of the grand jury proceedings, some of which involved forfeiture of the Theresa Lane property, and some of which involved references to Fisher's ex-husband's fraud conviction.[3] Judge Scott concluded that these materials “go a long way toward explaining what actually happened before the grand jury regarding forfeiture, ” and he noted that, “at no time during the grand jury proceedings did the Government tell the grand jurors that a general vote on the entire indictment would be construed as both probable cause for the underlying offense and probable cause for a factual nexus.” Id. at 16-17. Judge Scott further concluded that “the grand jury materials finally make clear why the Government has been so passionate about the grand jury vote and about refusing to explain the origin of the funds that it wants to seize. Simply put, the Government has no idea where the funds in question came from, but it has a hunch that the funds ultimately traced back to unaccounted fraud proceeds from Fisher's ex-husband Gregory. In that context, the Government seeks forfeiture because it has unfinished business with [Fisher's ex-husband, ] Gregory.” Id. at 20. Finally, Judge Scott sua sponte invited four national legal organizations to appear as amici curiae and to file briefs addressing a number of questions raised by the Government's arguments and Judge Scott's interpretation of the grand jury proceedings.

         After Judge Scott filed his Decision and Order, the Government filed a notice stating that “the government was (and remains) willing and prepared to run a Monsanto hearing.” Docket No. 65 at 1. However, “so that there is no ambiguity or uncertainty, ” the Government stated that it “consent[ed] to [Fisher's] request for a Monsanto hearing and will present witness testimony at that hearing.” Id. In light of its concession, the Government requested that Judge Scott withdraw his Decision and Order, noting that it “touches upon wide-ranging issues which far exceed the limited relief sought by the defendant, i.e., that a Monsanto hearing be conducted.” Id. at 2.

         Before Fisher responded to the Government's motion, the Government also released its lis pendens on the Theresa Lane property. Docket No. 76. The Government noted that its decision to lift the lis pendens mooted Fisher's motion for a Monsanto hearing. Docket No. 77 at 1. The Government also asked Judge Scott to cancel his invitation for amici in light of the Government's efforts to return this case to a normal pre-trial track. Id. at 2. Finally, the Government asked Judge Scott to put a scheduling order in place. Id. at 3. Fisher then filed a response to the Government's motion, as well as her own motion seeking dismissal of the superseding indictment and reimbursement of legal fees. See Docket No. 80.

         Judge Scott denied the Government's motion to withdraw his Decision and Order soliciting amici, but he noted that the Government's decision to release the lis pendens mooted several of the questions he had posed for amici. Judge Scott also set a schedule for the filing of amicus briefs. See Docket No. 81.

         The Government then appealed Judge Scott's Decision and Order denying the Government's motion to withdraw his Decision and Order soliciting amici. Docket No. 83. After hearing from Fisher, this Court vacated Judge Scott's Decision and Order, noting that the forfeiture statute at issue in this case, 31 U.S.C. § 5317(c)(1)(A), [4]“unequivocally” answered the extant questions for amici. Docket No. 97 at 3-4. Also noting that both parties are ably represented, the Court concluded that it could find no “sound reason for the Magistrate Judge to solicit assistance from non-parties.” Docket No. 97 at 4.

         Judge Scott ultimately filed the Report and Recommendation that is before the Court. See Docket No. 107. Judge Scott recommends dismissing the superseding indictment without prejudice or, in the alternative, striking the forfeiture allegation. The Government objected, and the Court largely declined to adopt the Report and Recommendation in its December 2016 Decision and ...

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