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Court Rules in Forfeiture Proceedings

A New York Criminal Lawyer said in May, 1989, the United States Attorney’s Office for the Southern District of New York authorized agents from the Drug Enforcement Administration (DEA) to commence an investigation into a narcotics organization allegedly headed by the defendant operating in both New York State and New Jersey. Six months later, the Office of the Special Narcotics Prosecutor for the City of New York joined in this investigation and obtained electronic and telephonic eavesdropping warrants from a New York State Supreme Court Justice.

A New York Criminal attorney said that in April 1991, the defendant was arrested pursuant to this joint federal and state investigation by agents of the DEA Task Force. He was indicted for Conspiracy in the Second Degree, Criminal Sale of a Controlled Substance in the First Degree and related offenses by a Grand Jury sitting in New Jersey County.

A New York Criminal Lawyer said in an effort to seize alleged drug proceeds in the defendant’s name and in the name of his ex-wife, the People initiated forfeiture proceedings under Title 21 United States Code 881. In April 1991, a Magistrate of the United States District Court of the District of Puerto Rico issued an in rem seizure warrant for various bank accounts in Puerto Rico. Upon execution of the warrant, two certificates of deposit were seized in the sum of $250,000.

In April 1991, an in rem seizure warrant was issued by a Magistrate of the Southern District of New York. Pursuant to this warrant, three cashier’s checks were seized from National Westminster Bank in Bronx County totalling $114,423.25 in the name of the defendant.

A Westchester County Criminal Lawyer said that following the defendant’s arrest, defendant retained a law firm and on counsel’s instructions, she directed the bank in Puerto Rico to wire approximately $125,000 to counsel’s New York account. In addition, she gave defense counsel a cashier’s check for $84,229.42 from her other Bank account, which was deposited by defense counsel into their business account.

A New York City Criminal Lawyer said pursuant to the forfeiture proceedings, the funds from both accounts were seized prior to the transfers and the initial retainer of $209,229.42 was not received by the firm. Although defendant has not claimed the funds in the name of his ex-wife as his own, he contends that he needs all of these funds to compensate counsel of his choice and that he has a right to obtain them for this purpose.

The New York State legislature enacted CPLR Article 13-A to “take the profit out of crime”. To that end, the statute provides for the institution of an action which is “civil, remedial and in personam in nature”. Under Article 13-A, a civil action may be commenced by the appropriate claiming authority against a criminal defendant to recover the property which constitutes the proceeds of a crime, the substituted proceeds of a crime, an instrumentality of a crime or the real property instrumentality of a crime.

The in personam nature of Article 13-A allows the prosecution to forfeit any of a defendant’s assets which are shown to be proceeds or substituted proceeds of a crime once the amount of gain from the criminal activity is established. In addition, the prosecution may obtain an in personam judgment against a non-criminal defendant by proving the non-criminal defendant was aware or should have been aware that the property coming into his or her possession was the proceeds of a crime.

Although the forfeiture proceedings are stayed during the pendency of the related criminal matter, the People may move to preserve the defendant’s property pre-conviction. Under CPLR 1312, the four basic provisional remedies of attachment, injunction, receivership and notice of pendency are available in all actions to recover property or for a money judgment. A court may grant an application for such a remedy when it appears that the prosecution will prevail on the issue of forfeiture and a failure to enter the order may result in the property being destroyed, removed from the court’s jurisdiction, or otherwise be unavailable for forfeiture.

The amicus brief, submitted by New York State Association of Criminal Defense Lawyers relies upon a case to support its contention that New York’s forfeiture statutes allow the People to assert jurisdiction effectively over a defendant’s out-of-state assets. In said case, a New York court issued a preliminary injunction enjoining defendants from encumbering or removing real property located in Pennsylvania allegedly purchased with the proceeds of a crime. While this court does not question the validity of such a remedy, violation of the court’s order is punishable solely by contempt–a negligible sanction to a defendant facing charges under New York’s narcotics laws.

Applying this finding to the case at bar, the prosecution cannot effectively forfeit the defendant’s Puerto Rican bank accounts under New York’s forfeiture laws. The lengthy process of obtaining a final order in New York’s Civil Court to allow the people to proceed against these accounts by way of a court in Puerto Rico would clearly be futile. Therefore, a claiming authority under CPLR Article 13-A has no jurisdiction over funds located outside the borders of New York State.

The Court finds that in order to meet the legislature’s goal of “taking the profit out of crime”, a New York State prosecutor must be able to use federal forfeiture laws to seize out-of-state assets or assets located in New York State which do [151 Misc.2d 648] not fall within the purview of Article 13-A. Furthermore, to require the People to forfeit some of a defendant’s funds under Article 13-A and the remainder under federal forfeiture laws would place too great a burden on the prosecution and is not in the interest of judicial economy. Therefore, this court concludes that as long as a state prosecutor fully satisfies the requirements set forth below, he or she may elect to use federal forfeiture laws in pursuing the seizure and forfeiture of a defendant’s assets.

Under federal law, an accused is guaranteed the right to competent counsel, not necessarily counsel of choice. [W]hile the right to select and be represented by one’s preferred attorney is comprehended by the Sixth Amendment, the essential aim of the Amendment is to guarantee an effective advocate for each criminal defendant rather than to ensure that a defendant will inexorably be represented by the lawyer whom he prefers.

The Court in Wheat identified circumstances in which a defendant’s right to counsel of choice is limited. For example, a defendant cannot demand to be represented by an attorney he or she cannot afford. Nor can a defendant spend criminal proceeds which are subject to federal forfeiture statutes to finance his or her defense even if the defendant will be prevented from obtaining counsel of choice.

The New York courts, however, recognize a broader Sixth Amendment right to counsel. While the Right to Counsel Clause in the New York State Constitution is more restrictive than that of the Sixth Amendment to the United States Constitution, the New York Court of Appeals has interpreted the State Constitution to provide far more expansive protection to a defendant than its federal counterpart.

This constitutional guarantee ensuring the right of a defendant to be represented at trial by counsel of his own choosing serves many critical needs. By granting a defendant a reasonable opportunity to retain counsel of his own choosing, individual rights are honored and the ultimate public concern at any criminal trial–the need to discern the truth–is best effectuated the courts of this State have remained vigilant in their duty to ensure that a defendant’s right to counsel of his own choosing is protected. In short, courts must remain sensitive to the benefits which both the defendant and the legal process itself derive from permitting the criminally accused to obtain counsel of his own choosing, and should undertake the steps reasonably required to ensure that the defendant’s right to retain counsel is honored.

It is clear that a state prosecutor cannot compel federal courts to relinquish control over seized assets. However, the same cooperation between the federal, state and local agencies which resulted in the creation of the Drug Enforcement Administration’s joint Task Force must also provide for an equitable distribution of forfeited assets, or the prosecution should proceed federally with all costs borne by the federal government.

While some “sharing” of assets between local, state and federal agencies may occur at present, any distribution is decided on a case-by-case basis and does not contemplate attorney’s fees. No attorneys’ fees have ever been provided for out of seized funds; and there is no expectation by this court that a prosecutor sua sponte will make provisions for a defendant to have counsel of his or her choice compensated from assets which have been forfeited. Therefore, a court order to this effect, imposing serious sanctions for non-compliance, is necessary. The imposition of such sanctions on the prosecution to prevent the abridgement of a defendant’s fundamental constitutional right to counsel of choice is well-founded in New York State law.

To the extent that a defendant has elected to place his or her assets outside of New York State, the People are not obligated to obtain assets seized in federal forfeiture proceedings to retain counsel of choice. The People’s duty to secure funds for retention of counsel of choice extends only to those funds which they could have seized under Article 13-A. By placing assets outside of New York, a defendant has placed his or her assets outside the authority of the New York forfeiture laws and, therefore, outside the ambit of the New York State Constitution.
In addition, New York clearly has a financial interest in any funds forfeited within its jurisdiction. To allow the federal government to reap the rewards of an investigation funded in whole or in part by New York State funds, prosecuted by a state prosecutor, defended in some cases by state-funded legal counsel and litigated in state court all supported by New York State tax dollars–would be to disregard totally the legitimate financial interests of New York State.
The People have an obligation in every case to ensure that New York State is reimbursed for administrative expenses. Even where a defendant has placed all of his or her assets outside the state, the substantial costs associated with an investigation and ensuing litigation, including costs of County Law article 18-B representation, should also be defrayed by any federally forfeited assets. While this is not a responsibility that the courts can monitor and/or enforce, the People must recognize their commitment to the New York State taxpayers to ensure that the state is as fully compensated for its expenses as practicable. While there is some recognition of this duty at present, more attention should be paid to enforcing New York State’s interests in the future.

Every New York State court has an obligation to ensure that the rights granted to a defendant by the state are not abridged in a state prosecution. The guidelines set forth above recognize the People’s right to elect the forfeiture forum as long as the defendant’s state right to counsel of choice is protected. Where a defendant’s forfeited property is located within New York State, and therefore could have been forfeited under CPLR 13-A, the People have a duty under the State Constitution to obtain a reasonable portion of those funds so that counsel of choice may be retained.

The Court finds that as long as New York State’s constitutional and financial interests are safeguarded by the prosecution, the People may elect to proceed under either state or federal forfeiture laws. In the case at bar, the court finds that New York State has no effective jurisdiction under CPLR 13-A over the bank accounts seized and therefore the People are not required to provide funds for defense counsel under Article I, ยง 6 of the New York State Constitution.

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