louis posner v. new york city police department - appellate division, state of new york
DESCRIPTION
Brief filed in Appellate Division, First Department, New York State, for Respondent Louis Posner, in opposition to appeal by New York City Police Department, by Jonathan S. Gould, Esq., NYPDTRANSCRIPT
CAL NO._________ Submitted by: Jonathan S. Gould,
Esq.
New York County Criminal Indictment No. 3982/08==============================================================
New York Supreme CourtAPPELLATE DIVISION --- FIRST DEPARTMENT
_______________________________
THE PEOPLE OF THE STATE OF NEW YORK, Plaintiff,
-against-
LOUIS POSNER and BETTY POSNER, Defendants-Respondents,
NEW YORK CITY POLICE DEPARTMENT, Non-Party Appellant.--------------------------------MICHAEL KESSLER, Third-Party Respondent.
JOSEPH A. BONDY, ESQ., ROBERT FOGELNEST, ESQ., and MARGARET CLEMENS, Third-Party Intervenors-Respondents. _______________________________________________________________
BRIEF FOR DEFENDANTS-RESPONDENTS LOUIS POSNER AND BETTY POSNER ______________________________________________________________________________
Jonathan S. Gould, Esq. Attorney for Defendants-Respondents
603 West 115th Street, Suite #198 New York, New York 10025 212-531-4852
April 18, 2011
0
REPRODUCED ON RECYCLED PAPER
TABLE OF CONTENTS TABLE OF CONTENTS...............................................................................................................................- 1 -
TABLE OF AUTHORITIES...........................................................................................................................- 3 -
Cases....................................................................................................................................................... - 3 -
Statutes...................................................................................................................................................- 5 -
Other Authorities.................................................................................................................................... - 6 -
PRELIMINARY STATEMENT...............................................................................................................- 8 -
COUNTERSTATEMENT OF QUESTIONS PRESENTED....................................................................- 9 -
COUNTERSTATEMENT OF THE NATURE OF THE CASE...........................................................- 10 -
FACTS................................................................................................................................................... - 11 -
A. The Court Below Found That There Was “Probable Cause” for the Ex Parte Search Warrants That Pauperized the Posners By Seizing All of Their Money................................................................................................................................- 13 -
B. Comprehensive Applications Made and Hearings Held Before the Court Below Authorizing Payments from Seized Funds for Reasonable Attorneys’ Fees, Experts’ Fees and Living Expenses.....................................- 15 -
C. Prior to Trial, NYPD Refused to Comply with Court Orders to Release Seized Funds to Pay for Attorneys’ Fees and Expenses.............- 19 -
D. Following a Full Hearing on the Merits, The Court Below Rendered a Memorandum Decision and Order Directing The NYPD Comply with All Orders for Payments from Seized Funds...................................................................- 22 -
ARGUMENTS:....................................................................................................................................... - 26 -
I. THE COURT BELOW HAD BOTH STATUTORY AUTHORITY OVER THE DISPOSITION OF ASSETS SEIZED BY SEARCH WARRANTS UNDER THE COURT’S CUSTODY [C.P.L. § 690.55] AND EQUITABLE AUTHORITY TO ISSUE AND ENFORCE ITS OWN ORDERS..- 26 -
II. UNDER NEW YORK LAW, A BROADER SIXTH AMENDMENT RIGHT TO COUNSEL OF CHOICE AND FOR LIVING EXPENSES FROM SEIZED ASSETS IS RECOGNIZED THAN UNDER THE FEDERAL STATUTES.................................................................................................- 31 -
III. THE COURT BELOW DID NOT ABUSE ITS DISCRETION IN ISSUING ORDERS TO RELEASE FUNDS FOR REASONABLE ATTORNEYS’ FEES, EXPERTS’ FEES AND LIVING EXPENSES........................................................................................................................................... - 39 -
1
IV. NYPD’s Commencement of a Forfeiture Action Under NYC Admin Code § 14-140 Does Not Divest the Court Below of Its Exclusive Jurisdiction Over the Seized Monies..........................................................................................................- 45 -
SANCTIONS:....................................................................................................................................... - 50 -
THIS COURT SHOULD IMPOSE SERIOUS SANCTIONS UPON NYPD, BY VACATING THE CONVICTION AND SENTENCE AND DISMISSING WITH PREJUDICE THE INDICTMENT - 50 -
A. NYPD Acted in “Bad Faith” By Circumventing Procedural Safeguards of New York State Forfeiture Statutes and Interfering With the Posners’ Constitutional Right to Counsel of Choice and a Proper Criminal Defense [NYS Const., Article 1, §6]...................................................- 52 -
B. This Court is Empowered to Impose Serious Sanctions Upon NYPD, Including Vacating the Conviction and Sentence and Dismissal With Prejudice of the Indictment [C.P.L. §§ 210.20[1][h] and 210.40(1)] - 56 -
CONCLUSION:.................................................................................................................................... - 62 -
THIS COURT SHOULD AFFIRM THE DECISION AND ORDER OF THE COURT BELOW AND SERIOUSLY SANCTION NYPD........................................................................................................- 62 -
PRINTING SPECIFICATIONS STATEMENT.................................................................................- 63 -
2
TABLE OF AUTHORITIES
Cases
Application of Harnishfeger, 158 Misc.2d 299 (Sup. Ct., Monroe Co. 1993................................................................................................................................................. - 14 -
B.T. Productions, Inc. v. Barr, 44 N.Y.2d 226, 405 N.Y.S.2d 9 (1978) - 14 -
Boyle v. Kelley, 42 NY2d 88 (1977)..............................................................................- 30 -Byam v. City of New York, 68 AD3d 798 (2d Dep’t 12/8/09)..........................- 57 -Caplin & Drysdale v. U.S., 491 U.S. 617 (1989)..............................- 33 -, - 34 -, - 35 -City of New York v. Cosme, 67 A.D.2d 852, 413 N.Y.S.2d 20 (1st Dep't 1979)............................................................................................................................................... - 48 -
City of New York v. Karma Properties, LLC, Index No. 401691-2008 (Sup. Ct., N.Y. Co., Nov. 18, 2008)......................................................................................- 12 -
City of New York v. Three Amigos SJL, Inc., Index No. 400763-2010 (Sup. Ct., N.Y. Co. Mar. 28, 2011)..........................................................................- 14 -
Clay v. McCabe, 56 A.D.2d 747, 392 N.Y.S.2d 29 (1st Dept. 1977)..........- 48 -Crosby v. City of New York, 269 F.R.D. 267 (SDNY June 22, 2010)..........- 58 -Cunningham v. Nadjari, 39 N.Y.2d 314, 383 N.Y.S.2d 590 (1976).................- 9 -Dillon v. Marelli, 185 Misc. 2d 461, 713 N.Y.S.2d (Nassau Co. Ct. 2000)............................................................................................................................................... - 38 -
District Attorney, New York County v. Efargan, 12 Misc.3d 1186A, 2006 NY Slip Op 514562U (Sup. Ct., NY County, June 1, 2006)...........................- 39 -
Empire Eng. Corp. v. Mack, 217 NY 85, (1916)....................................................- 31 -Fallyn Rodriguez v. The City of New York, Index No. 11100821 (Sup. Ct., N.Y. Co. 2011)..............................................................................................................- 58 -
Hamilton v. City of San Bernardino, 325 F.Supp.2d 1087 (Dist. Ct., C.D. Cal., East. Div., 2004)........................................................................................- 56 -
Hudson v. City of New York, 267 AD2d 351 (2d Dep’t 1999)..........................- 57 -In re Lordan, 217 A.D. 441, 217 N.Y.S. 237 (1st Dept. 1926).....................- 53 -Maiorino v. City of New York, 39 AD3d 601 (2d Dep’t 2007)........................- 57 -Martin v. City of New York, 46 AD3d 635 (2d Dep’t 2007).............................- 57 -Matter of Documents Seized Pursuant to a Search Warrant, 124 Misc.2d 897 (Sup. Ct., Criminal Term, NY County, 1984)....................................- 27 -, - 28 -
McClendon v. Rosetti, 1993 WL 158525 (Dist. Ct., SDNY 1993)...................- 30 -McClendon v. Rosetti, 369 F. Supp. 1391 (S.D.N.Y. 1974)...................- 30 -, - 46 -McClendon v. Rosetti, 460 F.2d 111 (2d Cir. 1972...................................- 30 -, - 52 -Moreno v. City of New York, 69 N.Y.2d 432, 515 N.Y.S.2d 733 (1987)...- 30 -
3
Morgenthau v. Allocca, N.Y.L.J., Sept. 25, 1995, at 29, col. 1 (Sup. Ct., N.Y. Co. 1995)..............................................................................................................- 37 -
Morgenthau v. Citisource, Inc., 68 N.Y.2d 211 (1986)....................................- 36 -Morgenthau v. Clifford, 157 Misc. 2d 331, 597 N.Y.S.2d 843 (Sup. Ct. N.Y. Co. 1992), appeal withdrawn, 198 A.D.2d 923, 603 N.Y.S.2d 937 (1st Dep’t 1993).......................................................................................................................- 42 -
Morgenthau v. Efargan, Slip Op. November 2, 2005, Sup Ct, NY County, Index No. 401214/05..............................................................................................................- 39 -
Morgenthau v. Figliola, 4 Misc. 3d 1025(A), 798 N.Y.S.2d 346 (Sup. Ct. New York County June 2, 2004)............................................................................- 41 -, - 45 -
Moss v. Spitzer, 19 A.D.3d 599, 600 (2d Dep’t 2005)......................................- 26 -Pena v. Municipal Court, 96 Cal.App.3d 77 (Ct. of Appeals, 5th Dist., Cal. 1979)...................................................................................................................................- 56 -
People v. Arroyave (49 NY2d 264 [1980]...........................................................- 32 -, - 33 -People v. Bing, 76 NY2d 331 [1990]..............................................................................- 32 -People v. Burton, 6 N.Y.3d 584, 815 N.Y.S.2d 7(2006)....................................- 15 -People v. Davis, 75 NY2d 517 [1990]............................................................................- 32 -People v. Falynn Rodriguez, Index No. 2008NY053105 (Crim. Ct., N.Y. Co. 2010)..................................................................................................................................... - 57 -
People v. Fysekis, 164 Misc.2d 627 (Crim. Ct, Bronx Co. 1995)...............- 31 -People v. Goggins, 34 NY2d 163 [1974].......................................................................- 59 -People v. Hobson, 39 NY2d 479 [1976].........................................................................- 32 -People v. Komosa, 47 Misc.2d 634 (Cty. Ct., Cty. Kingston, NY 1965) - 56 -People v. Louis Posner, Index No. 2010NY022267 (Crim. Ct., NY Co. March 23, 2010).......................................................................................................................- 22 -
People v. Marin, 86 A.D.2d 40, 448 N.Y.S.2d 748 (2d Dep’t 1982)............- 9 -People v. Martinez, 151 Misc.2d 641 (Sup Ct, NY County, 1991).- 31 -, - 42 -, -
58 -People v. McIntosh, 199 A.D.2d 540, 606 N.Y.S.2d 248 (2d Dep’t 1993) - 9 -People v. Pantino, 106 A.D.2d 412, 482 N.Y.S.2d 334 (2nd Dep’t 1984) - 57 -People v. Purley, 297 A.D.2d 499, 747 N.Y.S.2d 10 (2002)............................- 9 -People v. Salzone, 98 Misc.2d 131 (Crim. Ct., Kings County 1978).......- 31 -People v. Settles, 46 NY2d 154 (1978).......................................................................- 32 -People v. Springer, 122 A.D.2d 87, 504 N.Y.S.2d 232 (2d Dep’t 1986) - 57 -People v. Tineo, 64 NY2d 531 (1985)............................................................................- 33 -Pinter v. City of New York, 710 F.Supp.2d 408(SDNY Sept. 13, 2010)...- 58 -Property Clerk of New York City Police Dept. v. Ferris, 77 N.Y.2d 428, 568 N.Y.S.2d 577 (1991)....................................................................................................- 48 -
Property Clerk, New York City Police Dept. v. Batista, 111 A.D.2d 135, 489 N.Y.S.2d 739 (1st Dep't 1985)...................................................................- 48 -, - 49 -
Property Clerk, New York City Police Dept. v. BMW Financial...................- 48 -
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Property Clerk, New York City Police Dept. v. Conca, 148 A.D.2d 301, 538 N.Y.S.2d 268 (1st Dept. 1989).............................................................................- 48 -
Property Clerk, New York City Police Dept. v. Corbett, 116 Misc.2d 1097, 457 N.Y.S. 175 (Sup. Ct., N.Y. Co., Spec. Term 1982)..................- 48 -
Property Clerk, New York City Police Dept. v. Deans Overseas Shippers, Inc., 275 AD2d 204 (1st Dep’t. 2000)........................................................................- 49 -
Property Clerk, New York City Police Dept. v. Ferris, 77 NY2d 428 (1991)............................................................................................................................................ - 49 -
Property Clerk, New York City Police Dept. v. Ford, 30 Misc.3d 301, 914 N.Y.S.2d 594 (Sup. Ct., NY Co., Nov. 24, 2010).....................................- 30 -
Property Clerk, New York City Police Dept. v. Hurd, 130 Misc.2d 358, 496 N.Y.S.2d 197 (Sup. Ct. N.Y. Co. 1985)..........................................................- 52 -
Property Clerk, New York City Police Dept. v. Hurlston, 104 AD2d 312 (1st Dep’t 1984).............................................................................................................- 48 -, - 49 -
Property Clerk, New York City Police Dept. v. Jennings, 11 Misc.3d 1088(A), 819 N.Y.S.2d 851 (Sup. Ct., N.Y. Co. 2006)..................................- 48 -
Property Clerk, New York City Police Dept. v. Lanzetta, 157 AD2d 600 (1st Dep’t 1990).......................................................................................................................- 49 -
Property Clerk, New York City Police Dept. v. Louis and Betty Posner, (Sup. Ct., NY County), Index No. 400536/10.......................................................- 20 -
Rampersad v. New York City Dep’t of Educ., 30 AD3d 218 (1st Dep’t 2006)............................................................................................................................................... - 57 -
Rojas v. City of New York, 27 AD3d 323 (1st Dep’t 2006).............................- 57 -Roviaro v United States, 353 US 53 [1957]..............................................................- 59 -State v. Crawley, 789 N.W.2d 899 (Minn. Ct. Appeals Sept. 28, 2010) - 56 -Stephen Chang v. Hot Lap Dance Club, a/k/a Premium Events, LLC, Index No. 103868-2008 (Sup. Ct., N.Y. Co., March 14, 2008)................................- 12 -
U.S. v. $490,920 in U.S. Currency, 911 F.Supp. 720 (SDNY 1996)............- 28 -U.S. v. $876,915.00 U.S. Currency, More or Less, 874 F.2d 104 (2d Cir. 1989)............................................................................................................................................... - 34 -
U.S. v. Parcel of Land, Bldgs., Appurtenances and Improvements, Known as 92 Buena Vista Ave., Rumson, New Jersey, 507 U.S. 111, 113 S. Ct. 1126 (1993)................................................................................................................................- 14 -
U.S. v. Stein, 541 F.3d 130 (2d Cir. 2009)...........................................................- 59 -United States v. $31,990 in U.S. Currency, 982 F.2d 851, 856 (2d Cir. 1993)............................................................................................................................................... - 34 -
Von Hofe v. U.S., 492 F.3d 175 (2d Cir. 2007)....................................................- 14 -
Statutes
18 U.S.C. § 981...........................................................................................................................- 34 -18 U.S.C. § 982...........................................................................................................................- 34 -
5
21 U.S.C. § 848...........................................................................................................................- 33 -21 U.S.C. § 853...........................................................................................................................- 34 -21 U.S.C. § 881...........................................................................................................................- 34 -C.P.L. § 10.10(7)........................................................................................................................- 8 -C.P.L. § 180.80...........................................................................................................................- 13 -C.P.L. § 210.20...................................................................................- 10 -, - 11 -, - 59 -, - 60 -, - 61 -C.P.L. § 210.40...................................................................................- 10 -, - 11 -, - 59 -, - 60 -, - 61 -C.P.L. § 220.50(6)....................................................................................................................- 47 -C.P.L. § 690.05...........................................................................................................................- 28 -C.P.L. § 690.10...........................................................................................................................- 14 -C.P.L. § 690.55...........................................................................- 9 -, - 10 -, - 23 -, - 26 -, - 27 -, - 29 -C.P.L.R. § 1311[4]....................................................................................................................- 38 -C.P.L.R. § 1312[4]........................................................- 19 -, - 36 -, - 37 -, - 38 -, - 41 -, - 43 -, - 47 -C.P.L.R. § 1316...........................................................................................................................- 36 -C.P.L.R. § 1317...........................................................................................................................- 36 -C.P.L.R. § 1349...........................................................................................................................- 47 -C.P.L.R. § 5701(a)......................................................................................................................- 9 -C.P.L.R. Article 13-A...........................................................- 16 -, - 18 -, - 23 -, - 36 -, - 37 -, - 47 -Civil Asset Forfeiture Reform Act of 2000, Pub. L. No. 106-185............- 35 -CPL § 710.60..................................................................................................................................- 13 -CPLR § 5518.................................................................................................................................... - 50 -New York Lawyer’s Code of Professional Responsibility, DR 2-110(A)...- 53 -NYC Admin. Code § 435-4.0[e]............................................................................................- 52 -NYC Admin. Code, § 14-140.....................................................................- 10 -, - 20 -, - 23 -, - 46 -NYS Const., Article 1, § 6.........................................................- 10 -, - 11 -, - 27 -, - 32 -, - 42 -P.L. § 175.30......................................................................................................................- 22 -, - 56 -P.L. § 230.25(1).........................................................................................................................- 21 -P.L. § 240.50(3)...............................................................................................................- 22 -, - 55 -PL § 480.30.................................................................................................................................... - 38 -U.S.C.A. Const. Amend. 6............................................................................................- 11 -, - 32 -U.S.C.A. Const. Amend. 8......................................................................................................- 14 -
Other Authorities
Cardozo's Court Reform Suggestions Are Misguided, Misplaced and Insulting, Letters to the Editor, NYLJ, Dec. 17, 2009, at 2 (col. 1) - 57 -
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M. Scholl, Judge Clarifies Rules to Tap Frozen Funds, 6/29/2006 NYLJ, 1 (col. 3) - 40 -
New York Criminal and Civil Forfeitures, by Steven L. Kessler, LexisNexis, 2007 Edition, pp. 4-184 – 4-185, @ Footnote 11 - 40 -
CAL NO._________ Submitted by: Jonathan S. Gould,
Esq.
New York County Criminal Indictment No. 3982/08==============================================================
New York Supreme CourtAPPELLATE DIVISION --- FIRST DEPARTMENT
_______________________________
THE PEOPLE OF THE STATE OF NEW YORK, Plaintiff,
-against-
LOUIS POSNER and BETTY POSNER, Defendants-Respondents,
NEW YORK CITY POLICE DEPARTMENT, Non-Party Appellant.--------------------------------MICHAEL KESSLER, Third-Party Respondent.
JOSEPH A. BONDY, ESQ., ROBERT FOGELNEST, ESQ., and MARGARET CLEMENS, Third-Party Intervenors-Respondents. _____________________________________________________________________________
BRIEF FOR DEFENDANTS-RESPONDENTS LOUIS POSNER AND BETTY POSNER ______________________________________________________________________________
Jonathan S. Gould, Esq. Attorney for Defendants-Respondents 603 West 115th Street, #198 New York, New York 10025 212-531-4852
7
April 19, 2011
REPRODUCED ON RECYCLED PAPER
PRELIMINARY STATEMENT
Defendants-Respondents Louis Posner and Betty Posner (the
“Posners”) submit this brief in opposition to the appeal of the
Non-Party Movant-Appellant, the New York City Police Department
(“NYPD”) from the Memorandum Decision and Order entered by the
Supreme Court, Criminal Part, New York County (Obus, J.), dated
April 13, 2010 (the “Decision and Order”)(A24-A29).1 2 3
This Court has subject matter jurisdiction over this appeal,
as C.P.L. § 10.10(7) provides that:
Notwithstanding any other provision of the [Criminal Procedure Law], [the State Supreme Court, Criminal Term] which possesses civil as well as criminal 1 Numbers in parentheses preceded by the letter “A” refer to pages in the Appellant’s Appendix. Numbers in parentheses preceded by the letters “BR” refer to pages in the Appellant’s Brief.2
The NYPD did not include any of the transcripts in their Appellant’s Appendix. The transcript for the hearing on March 25, 2010, and any other papers submitted to the Court below, is available upon request to counsel and this Court. References to any transcripts of hearings are designated by “TR”, followed by the date of the transcript, and page number.
3 Upon information and belief, Third-Party Respondents are submitting to this Court a Supplemental Appendix which shall include search warrants and supporting affirmation and affidavits; inventory and affidavits of property taken pursuant to search warrants; transcripts of proceedings dated August 20, 2009, October 1, 2009, and October 29, 2009; Court Orders, dated February 4, 2011 and March 17, 2011; Motion of Michael Kessler to Lift Stay and for Expedited Appeal; and various correspondence amongst the Court below, counsel for the defendants, the ADA, and the forensic accountant.
8
jurisdiction does not act as a criminal court when acting solely in the exercise of its civil jurisdiction, and an order of determination made by [the Court below] in its civil capacity is not an order or determination of a criminal court even though it may terminate or otherwise control or affect a criminal action or proceeding.
A judgment issued by a criminal court and addressed to an
entity which is not a party to the criminal proceedings is
appealable on the theory that such determination constitutes a
final judgment in a proceeding on the civil side of a court
vested with both criminal and civil jurisdiction. C.P.L.R. §
5701(a)[1],[2]; People v. McIntosh, 199 A.D.2d 540, 606 N.Y.S.2d
248 (2d Dep’t 1993); People v. Marin, 86 A.D.2d 40, 448 N.Y.S.2d
748 (2d Dep’t 1982); Cunningham v. Nadjari, 39 N.Y.2d 314, 383
N.Y.S.2d 590 (1976); People v. Purley, 297 A.D.2d 499, 747
N.Y.S.2d 10 (2002).
COUNTERSTATEMENT OF QUESTIONS PRESENTED
1. Does the Court below have exclusive statutory and
equitable authority to direct the NYPD Property Clerk to
release funds seized by search warrant under the custody
of the State Supreme Court, Criminal Part [C.P.L. §
690.55]?
2. Under New York law, is a broader Sixth Amendment right
to counsel of choice and for living expenses recognized
Than Under the Federal Statutes?
9
3. Did the Court below not abuse its discretion in issuing
Court Orders directing payments for reasonable attorneys’
fees, experts’ fees, and living expenses?
4. Did the Court below retain its exclusive jurisdiction
over the seized monies, notwithstanding NYPD’s
commencement of a forfeiture action under NYC Admin Code
§ 14-140?
5. Should this Court impose serious sanctions upon the NYPD
for their dereliction of their duty to ensure that funds
are available from seized assets for the criminal
defendants’ Constitutional right to counsel of their
choice [NYS Const., Article 1, § 6], warranting vacating
the conviction and sentence and dismissal with prejudice
of the criminal indictment [C.P.L. §§ 210.20[1][h] and
210.40(1)]?
COUNTERSTATEMENT OF THE NATURE OF THE CASE
The Decision and Order of the Court below is well founded in
its statutory and equity authority to order the release of assets
seized by search warrant for the payment of fees and expenses The
Court below relied on its statutory authority under C.P.L. §
690.55(1)(a) which provides that upon receiving property seized
pursuant to a search warrant, the court must retain the property
in the custody of the Court pending further disposition.[A28-
10
A29].
The Court below did not abuse its discretion in granting
Court Orders for payment from seized assets of reasonable
attorneys’ fees and experts’ fees for the Posner’s pending
criminal defense on a felony indictment, and for the Posners’
reasonable living expenses. [A27-A29].
The NYPD, with the support of the DA, requests that this
Court overrule the Court below and find that any monies seized by
search warrant may not be used for the payment of attorneys’ fees
and expenses or living expenses. Such a finding would subvert the
Constitutional safeguards in the various New York State
forfeiture statutes, and would set a precedent which would
violate the Constitutional rights of many criminal defendants.
NYPD was derelict in their duty to ensure that the Posners
had funds available from seized assets to protect their
Constitutional right to counsel of choice. [U.S. Const. Sixth
Amend; NYS Const., Article 1, § 6]. NYPD’s willful and
contumacious conduct warrants the imposition of serious
sanctions, to wit, vacating the conviction and sentence and
dismissal with prejudice of Criminal Indictment No. 3982/08.
[C.P.L. § 210.20[1][h] and C.P.L. § 210.40(1)].
FACTS
11
On the late evening of July 17, 2008, the NYPD arrested
Louis Posner at the Hot Lap Dance Club (the “HLD Club”) on West
38th Street in Manhattan and simultaneously arrested his wife
Betty Posner at their apartment in Manhattan.4 On or about July
17, 2008, the NYPD executed by ex parte search warrants at
various locations in Manhattan, including the personal residence
of the Posners, the professional offices of Louis J. Posner, PC,
a self-storage unit, and various banks that the Posners had
accounts. The NYPD and DA seized all of the monies owned directly
or indirectly by Louis Posner and Betty Posner, including the
business checking and savings accounts for HLD Entertainment
Corp., the business checking account for Louis J. Posner, P.C., a
professional corporation, the personal checking and savings
accounts for both Louis Posner and Betty Posner, and currency
held in safe deposit boxes at banks in which the Posners had
accounts.5 [A25] 4 Prior to the arrests and seizures on July 17, 2008, neither Louis Posner, age 52, nor his wife Betty Posner, age 56, had ever been arrested or charged or convicted of a crime. There had never been any prior arrests or convictions of any employees or customers at the HLD Club. There were never any prior civil suits against the HLD Club, except for one suit by a customer alleging personal injuries sustained during the course of a lap dance. Stephen Chang v. Hot Lap Dance Club, a/k/a Premium Events, LLC, Index No. 103868-2008 (Sup. Ct., N.Y. Co., March 14, 2008). 5 On July 17, 2008, the City of New York also sought a preliminary and permanent injunction against the commercial premises on West 38th Street in Manhattan in which the HLD Club was operating. On November 14, 2008, the defendants consented to the injunction "without admitting any participation in or any knowledge of any illegal activity inside the subject premises" and paid a fine of $3,000. Louis Posner also relinquished all claims to the currency seized from the subject premises by the NYPD under Property Clerk's Invoices Numbers P252824, P252825, and P252826. See, City of New York v. Karma Properties, LLC, Index No. 401691-2008 (Sup. Ct., N.Y. Co., Nov. 18, 2008). However, the Posners never relinquished their claims to currency seized by the NYPD under Property Clerk's Invoices Numbers P204475 ($110,000 from Commerce
12
A. The Court Below Found That There Was “Probable Cause” for the Ex Parte Search Warrants That Pauperized the Posners By Seizing All of Their Money
As a result of the seizures, the Posners had no available
funds for retaining attorneys or for living expenses. Unable to
post any bail money, Louis Posner was sent to the Manhattan
Detention Center and Betty Posner was sent to Rikers Island.
After spending 6 days in jail, the Posners were released on their
own recognizance as the DA was unable to secure an indictment
within the time prescribed by statute. [C.P.L. § 180.80].
At the Posners’ arraignment on September 4, 2008, the DA
submitted the People’s Voluntary Disclosure Form which included
“Discovery: Other Property: Money from 13 bank accounts, 2 safety
deposit boxes, 2 safes, the person of Louis Posner, and locations
in 344 W. 38th St...”. 6 Upon information and belief, as a result
of the seizures of all of their monies, the Posners were
pauperized and were forced to sell their used automobile, jewelry
and any remaining personal possessions of any value, and to use
all of the available balances on their credit cards, in order to
pay for food and other necessary living expenses.
In pre-trial suppression motions pursuant to CPL § 710.60,
Bank in Manhattan); P204476 ($110,000 from Sovereign Bank in Manhattan); P252828 ($20,000 from Manhattan Mini Storage); and P252829 ($11,950 from defendants' residential apartment in Manhattan).`6 People’s Voluntary Disclosure Form, Dated September 2, 2008, ¶ C. 6.(b), @ p. 7.
13
the Posners contested the ex parte seizures by search warrant of
all of the monies from the Posners and their controlled entities.
The Posners set forth various arguments, including that the
seizures of their monies were unlawful, the search warrants were
overbroad and vague, the seizures were an abuse of the search
warrant process under C.P.L. § 690.107, and lacked “probable
cause.”8 9 7 See Application of Harnishfeger, 158 Misc.2d 299 (Sup. Ct., Monroe Co. 1993 (The police through the mechanism of search warrants seeking seizure of automobiles involved in narcotics trafficking, are actually seeking forfeiture of these automobiles. However, the statute relied upon by the police, C.P.L. § 690.10, does not authorize such forfeiture.) B.T. Productions, Inc. v. Barr, 44 N.Y.2d 226, 405 N.Y.S.2d 9 (1978)
8 See, Von Hofe v. U.S., 492 F.3d 175 (2d Cir. 2007)(Forfeiture of claimant-wife's one-half interest in family residence under Civil Asset Forfeiture Reform Act (CAFRA), based on wife's alleged knowledge of husband's growing of marijuana in residence was excessive, in violation of the Excessive Fines Clause; even if jury found that wife was not an “innocent owner” within meaning of CAFRA, wife bore minimal blame for criminal activity that occurred at residence, absent evidence indicating any involvement in criminal activity beyond knowledge. U.S.C.A. Const. Amend. 8); U.S. v. Parcel of Land, Bldgs., Appurtenances and Improvements, Known as 92 Buena Vista Ave., Rumson, New Jersey, 507 U.S. 111, 113 S. Ct. 1126 (1993) (Protection afforded “innocent owners” under forfeiture provision of the Comprehensive Drug Abuse Prevention and Control Act of 1970 is not limited to bona fide purchasers, but may extend to property acquired by gift that was purchased with proceeds of illegal drug transactions.)
9 The City of New York commenced a civil action for a preliminary and permanent injunction against Three Amigos SJL, Inc., d/b/a Cheetahs Gentlemen’s Club ("Cheetahs"), at 250 West 43rd Street, New York City, as a result of arrests of employees at the Cheetahs on July 11, 2009 and Nov. 12, 2009 for illegal activity including prostitution. On March 26, 2010, the City of New York and Cheetah reached an agreement whereby Cheetah was enjoined from violating Article 220 of the Penal Law (controlled substances offenses), Article 221 of the Penal Law (offenses involving marijuana), Article 230 of the Penal Law (prostitution offenses), Section 7-703 of the NYC Administrative Code (public nuisance), and the NYS Alcoholic Beverage Control Law, and had to pay a fine of $7,500.00, and Cheetah continues to operate as an adult entertainment club. See, City of New York v. Three Amigos SJL, Inc., Index No. 400763-2010 (Sup. Ct., N.Y. Co. Mar. 28, 2011). Upon information and belief, the NYPD did not seize monies held by the owner of Cheetah or the owner's wife; or commence a forfeiture proceeding against the owner of Cheetah or the owner's wife; or arrest the owner’s wife late at night in her apartment and demand a high bail knowing that all of her money was seized.
14
The Court below never conducted an evidentiary suppression
hearing to determine if there was “clear and convincing evidence”
for the ex parte seizure by search warrant of the monies.10
Nevertheless, on June 19, 2009, the Court below ruled that there
was “probable cause” for the issuance of all of the search
warrants by the Court11, and declined to have the monies seized
by ex parte search warrant returned to its rightful owners. [A58-
A60].
B. Comprehensive Applications Made and Hearings Held Before the Court Below Authorizing Payments from Seized Funds for Reasonable Attorneys’ Fees, Experts’ Fees and Living Expenses
Criminal defense counsel retained by the Posners made
applications to the DA for payment of their attorneys’ fees. The
Court below and the DA reviewed all applications for retention of
professionals. Upon submission of detailed sworn affidavits to the
DA, the DA voluntarily agreed to pay the counsel fees for the Posners. 10 See People v. Burton, 6 N.Y.3d 584, 815 N.Y.S.2d 7(2006)(Court of Appeals vacated plea for trial court’s failure to grant hearing on motion to suppress evidence.)
11 In other pre-trial motions, Louis Posner’s counsel argued that: (i)there was a potential conflict of interest and ethical violation because several of the People’s witnesses before the Grand Jury who were granted complete immunity were represented by the same celebrity attorney who was allegedly also a member of the HLD Club[A36]; (ii)the NYPD may have withheld Brady material containing exculpatory evidence, as “there appear to be no tape recorded conversations between the undercover [NYPD Vice] police officers and defendant Louis Posner’s employees.”[A57]; and, (iii) the DA gave an unfair presentation before the Grand Jury in order to avoid exculpatory evidence, notwithstanding that “several employees called to testify did state that they were personally unaware of prostitution at the club, that the majority of dancers were not involved in such activity, or as noted, that defendant sometimes admonished employees not to engage in such activity.”[A35]. The Court below denied all of the Posners’ pre-trial omnibus motions.
15
On December 4, 2008, the Court issued orders, with the consent of the
DA, directing the DA to release funds seized and held in the DA’s
escrow account for legal fees for the Posners’ counsel.(A26, A74).
Louis Posner subsequently retained trial counsel, Robert
Fogelnest, Esq. (“Fogelnest”) and Joseph Bondy, Esq. (“Bondy”). At a
hearing before the Court below, on August 20, 2009, the retainer for
Fogelnest and Bondy were approved, upon a finding that the proposed
fee structure and hourly rates were reasonable (A26, A124). (TR
8/20/2009, pp. 3-14).
In preparation for trial, Fogelnest and Bondy also retained
Margaret Clemens (“Clemens”), a private investigator, and her
retention was also approved by the Court below on August 20, 2009
(A26, A124). (TR 8/20/2009, pp. 14-15). At the hearing before the
Court below on August 20, 2009, the DA advised the Court below that
the DA “will bring a forfeiture action” under Article 13-A.
Notwithstanding the DA’s claims of the “advantage of a forfeiture
proceeding...under 13-A,” the DA never commenced a forfeiture
proceeding in this case. (TR 8/20/2009, p. 6).
Betty Posner subsequently retained trial counsel Michael Bachner,
Esq. (“Bachner”), whose retention, including the proposed hourly
rates, was approved by the Court below.(A26). Bachner first
appeared before the Court below at a hearing on October 1, 2009.
Bachner advised the Court below that he had been forced to file
on behalf of Betty Posner a motion “for release of funds seized
from Betty Posner’s personal bank accounts”(TR 10/1/2009, pp. 3-4);
16
and will be filing a motion to have Betty Posner’s misdemeanor trial
severed from Louis Posner’s felony trial.(TR 10/1/2009, pp. 18-19).
All criminal charges against Betty Posner were ultimately dismissed.
(BR13-14).
In preparation for trial, Louis Posner’s attorneys retained
Michael Kessler (“Kessler”), a forensic accountant (A74). At a
hearing on October 1, 2009, the retainer agreement and curriculum
vitae were reviewed and the Court below held that it would
“authorize the payment for the expert.” (A26, A124) (TR 10/1/2009
@ p. 7).(A26).
As a result of the Posners’ financial circumstances, Louis
Posner made an application for monthly living expenses. The
Posners submitted to the DA and Judge Obus a comprehensive and
detailed affidavit of financial information, sworn to on or about
September 15, 2009, supplementing prior affidavits of financial
information, sworn to on or about September 20, 2008, and June 3,
2009. (A26).
On October 1, 2009, the Court below heard the Posners’
application for a living expense. At the hearing, Fogelnest
argued that:
“Mr. Posner … is about to be evicted from his rent-stabilized apartment. (TR 10/1/2009, p. 8)
He has earned very little money in the last 14 months. He owes $16,000 on his credit card… because the prosecutor has improperly taken this money, not
17
complied with the forfeiture statute which requires that within 5 days they file for forfeiture, which would give Mr. Posner the right to notice and a hearing and specifically provides for his maintenance.(TR 10/1/2009, pp. 8-9)
The prosecutor is benefitting from his own inaction. The last time we were in court on August 20 [2009] he said I’m going to file the forfeiture [under Article 13-A]… And yet he continues to fail to do so.
This is totally, totally improper. I have read Mr. Bachner’s papers. There are cases cited in there which specifically say that the prosecutor can’t use the seizure statute to circumvent the provisions of the forfeiture law.(TR 10/1/2009, p. 9).
This money is not within the DA’s control. It is within the control of the Court and [ADA] Hurley can’t unilaterally make a decision. He concedes that some of the money is appropriate…” (TR 10/1/2009, p. 10).
The Court below granted an interim allowance of approximately
$3,760 per month to the Posners. (TR 10/1/2009, p. 15).
An adjourned hearing was held on October 29, 2009, where
Fogelnest advised the Court that:
I have some additional documents to present to the Court if I may. The first is a Three Day Notice that Mr. and Mrs. Posner indeed are in default in their rent and are about to be evicted. Another is a statement showing that they owe $7,817.88 in rent.
The third document is a notice of termination of their health insurance for non-payment. Another is a notice of cancellation from State Farm Insurance of renter’s insurance...(TR 10/29/2009, pp. 5-6).
On October 29, 2009, the Court granted a further interim
allowance to the Posners for $3,760 per month. (TR 10/29/2009, p.
11)
18
On or about December 3, 2009, following a full and fair
opportunity for the DA to contest any of the applications,
including submission of opposition papers and oral argument, the
Court below granted a monthly living allowance of $8,500 to the
Posners (A26), but denied Betty Posner’s application to release
monies from her seized personal checking and savings accounts.
(TR 12/3/2009).
C. Prior to Trial, NYPD Refused to Comply with Court Orders to Release Seized Funds to Pay for Attorneys’ Fees and Expenses
After various Court Orders for attorneys’ fees, experts’
fees and living expenses were approved and paid from seized
monies, the NYPD refused to honor any of the Court Ordered
payments by the Court below, entered on February 18, 2010.(A27).
On March 2, 2010, Bondy wrote to Judge Obus advising the
Court below that the NYPD was refusing to comply with the Court
Orders for payments (A65-66). Bondy argued that there was no
reason to relitigate the issue of payment of fees and allowances
from seized assets, which was provided for by C.P.L.R. § 1312[4].
Bondy advised the Court below that:
Mr. Posner has entered into an agreement with the Civil Court to pay his rent arrears in lieu of his family being evicted from their apartment. The first payment is due on March 5, 2010. (A66). (A66).
19
On or about March 5, 2010, the NYPD Property Clerk served a
complaint for a forfeiture proceeding pursuant to Administrative
Code § 14-140 in Property Clerk, New York City Police Dept. v.
Louis and Betty Posner, (Sup. Ct., NY County), Index No.
400536/10 in State Supreme Court, Civil Part, New York County.
(A83-A92) The complaint for forfeiture was served 20 months after
the commencement of the criminal proceedings, and less than one
month before the scheduled trial date in the Court below. (A27)
Aside from filing a summons and complaint, the NYPD Property
Clerk failed to pursue the forfeiture proceeding in the Civil
Part of the State Supreme Court. The NYPD Property Clerk never
filed any motions or conducted any discovery in the forfeiture
proceeding under Administrative Code § 14-140. The NYPD Property
Clerk continued to litigate the Court Orders for the release of
seized funds held by the Property Clerk in the Court below. No
attempt was made to transfer this forfeiture litigation in the
Criminal Part to the Civil Part of the State Supreme Court.
On March 9, 2010, Judge Obus issued further Court Orders for
the payment of fees from seized assets. The NYPD Property Clerk
refused to comply with the Court Orders of March 9, 2010. (A27).
On March 15, 2010, just two weeks before a scheduled State
Supreme Court criminal trial date of April 1, 2010, NYPD moved in
the Court below by Order to Show Cause to vacate various Court
20
Orders signed by Judge Obus on February 18, 2010 and March 9,
2010.(A27, A67-A120). The Court below ordered that the
“Defendants, and the Defendants’ attorneys,… are stayed from any
proceedings to enforce the orders [for attorneys’ fees and
expenses and living expenses] pending the determination of this
motion.”(A67-A70).
On March 23, 2010, Louis Posner, while still subject to the
aforementioned stay of enforcement of all pending Court Orders
for payment of attorneys’ fees and expenses and his living
expenses, pled guilty in the Court below to P.L. § 230.25(1), and
Louis Posner executed a Stipulation of Forfeiture in favor of the
NYPD (A27). At the hearing on March 23, 2010 before the Court
below, the DA instructed the Court that:
The parties have agreed to request that in allocuting Louis Posner, on his plea of guilty under the indictment, the Court question him to establish that he’s fully satisfied that his attorneys have provided him with effective assistance and have billed appropriately for their services and the services of the investigator and accountant they hired to assist in his defense, because if he states he’s not satisfied about these matters, the guilty plea would not be acceptable to the People. This is our agreement. (TR 3/23/2010, pp. 6-7).
At the hearing on March 23, 2010, Louis Posner advised the
Court below that he was fully satisfied with the services
provided by the attorneys representing him (TR 3/23/2010, pp. 9-
10); that he waived his right to appeal (TR 3/23/2010, p. 11);
21
and that no one made promises or threats in order for him to
enter the plea. (TR 3/23/2010, p. 11).
On the same day, March 23, 2010, while being jailed on three
new misdemeanor charges for filing a false police report with
NYPD Internal Affairs Bureau (“IAB”) against NYPD Vice
Enforcement Unit (“Vice”), Louis Posner also pled guilty in
Manhattan Criminal Court to two counts of Falsely Reporting an
Incident under P.L. § 240.50(3); and one count of offering a
False Instrument for Filing under P.L. § 175.30. See People v.
Louis Posner, Index No. 2010NY022267 (Crim. Ct., NY Co. March 23,
2010).
D. Following a Full Hearing on the Merits, The Court Below Rendered a Memorandum Decision and Order Directing The NYPD Comply with All Orders for Payments from Seized Funds
On March 25, 2010, a final hearing was held before the Court
below, and the NYPD and the DA had a full and fair opportunity to
object to the Court Orders for attorneys’ fees, experts’ fees and
living expenses. The NYPD argued that the Court below lacked
personal jurisdiction over the NYPD as a nonparty to this
litigation, and that the defendants have no legal statutory
authority to the funds. (TR 3/25/2010, pp. 2-5).
The DA submitted an amicus letter on the date of the
hearing, and argued that the legal billings for Fogelnest and
22
Bondy were not reasonable because they were almost double the
amount of Louis Posner’s former attorneys for less work; that he
opposes any payments to investigators or forensic accountants as
completely unnecessary; that the Posners should not receive any
living expenses because Louis Posner allegedly posted on the
Internet some anonymous reviews of clubs; and that he has changed
his policy and now objects to any payments for attorneys’ fees or
expenses from monies seized by search warrant. (TR 3/25/2010, pp.
9-13)(A125-A171).
At the hearing before the Court below, Bondy argued that the
Posners relied upon the agreement to receive living expenses in
negotiating an agreement in housing court to pay $13,800 in rent
arrears, otherwise they will be evicted; that the forfeiture
proceeding brought under the NYC Admin Code §14-140 is an end run
around NYS Article 13-A; that CPL § 690.55 allows for the Court
below to authorize payment of fees and expenses from assets
seized by search warrant; that the State Supreme Court has equity
jurisdiction to award fees and expenses; that Replevin is not a
remedy; and that the “state constitution is more expansive … and
affords Mr. Posner his right of counsel of choice.” (TR
3/25/2010, p. 5-9, 13)
Fogelnest argued that if the attorneys had not been assured
by the Court that they would have been paid upon review of his
bills, that “we would have never entered the case… I would have
23
never retained the forensic accountant, nor would I have retained
the investigator, because that was upon this Court’s
representation;” that the Court has jurisdiction over the money
as the custodian of the funds; and that it is “in such bad faith
for them to attack our fees...approved by the Court.” (TR
3/25/2010, pp. 13-15).
On or about March 25, 2010, the attorneys and litigation
experts submitted their final invoices for payment from seized
funds.(A27) The final payments were approved by the Court below
in its Decision and Order, dated April 13, 2010.(A29, A2-A20).
Following the submission of papers and oral argument,
including full participation by the NYPD and the DA, Judge Obus
rendered a five page memorandum Decision and Order directing the
NYPD Property Clerk to comply with the payment of Court Orders
for February 18, 2010, March 9, 2010, and final Court Ordered
payments, dated April 13, 2010.(A24-A29).
The Decision and Order held that:
“[O]n the merits, this Court adheres to its view, articulated over six months ago, that under the unique circumstances posed by this case, disbursement of funds for attorney and expert fees and living expenses to further defendants’ Sixth Amendment rights and meet a pending criminal prosecution is permissible” (A28-29).
In rendering the Decision and Order, the Court below was:
24
“mindful of the unique circumstances of this case”, including “the disputed claim regarding whether the NYPD Legal Division would have accepted service and the undisputed claim of service on Corporation Counsel; the NYPD’s slow pace in routing and responding to the proposed orders which led to its default; and the curable nature of any technical irregularities. All parties have now received all of the orders and have had an opportunity to be heard” (A28).
The Decision and Order further noted “the protracted
litigation over the payment issues which preceded the NYPD’s
entrance into the proceedings,” and “the unbroken involvement by
the District Attorney on this issue, including two submissions
filed in support of the NYPD’s motion” (A28).
The Court below in its memorandum Decision and Order
directed the NYPD Property Clerk to comply with the payment of
Court Orders for February 18, 2010, March 9, 2010, and final
payments, dated April 13, 2010, as summarized below (A21-29):
Court Orders, entered Feb. 18, 2010:Robert Fogelnest, attorney fees for Louis Posner (A79) $8,575.00Joseph Bondy, attorney fees for Louis Posner (A79) 5,600.00Michael Kessler, forensic accounting (A82)` 17,149.50Margaret Clemens, private investigator (A78) 7,017.53
Louis Posner, living expenses for January (A80) 1,400.00Louis Posner, living expenses for February (A81) 8,500.00Total Court Orders, entered 2/18/2010 $48,242.03
Court Orders, entered March 9, 2010:Robert Fogelnest, attorney fees Louis Posner (A171.2) $7,425.00Joseph Bondy, attorney fees for Louis Posner (A171.2) 5,250.00 Joseph Bondy, attorney fees for Louis Posner (A171.2) 6,350.00Louis Posner, living expenses for March (A171.3) 8,500.00Total Court Orders, entered 2/18/2010 $27,525.00
Court Orders, entered April 13, 2010:Robert Fogelnest, attorney fees (A2-A6) $23,120.00
25
Joseph Bondy, attorney fees (A7-A11) 11,860.94 Michael Kessler, forensic accounting (A16-A20) 30,853.50Michael Bachner, attorney fees Betty Posner (A12-A15) 13,372.88 Total Court Orders, entered 4/13/2010 $79,207.32
ARGUMENTS:
I. THE COURT BELOW HAD BOTH STATUTORY AUTHORITY OVER THE DISPOSITION OF ASSETS SEIZED BY SEARCH WARRANTS UNDER THE COURT’S CUSTODY [C.P.L. § 690.55] AND EQUITABLE AUTHORITY TO ISSUE AND ENFORCE ITS OWN ORDERS
The Court below had statutory authority over the disposition
of assets seized by search warrants under the Court’s custody.
“Property seized pursuant to search warrant remains in control of
the issuing judge.” Moss v. Spitzer, 19 A.D.3d 599, 600 (2d Dep’t
2005); CPL § 690.55[1]. In the Letter Memorandum of Joseph Bondy,
dated March 23, 2010 (the “Bondy Memo”), counsel for Louis Posner
argued that:
“In citing C.P.L. § 690.55, the NYPD neglects that subsection 1(a) expressly provides that Your Honor can retain funds seized pursuant to a warrant pending “further disposition” not only pursuant to C.P.L. § 690.55(2), but also “to some other provision of law” – here the United States and New York State Constitutions. (A123).
At the hearing before Judge Obus on March 25, 2010, Bondy
argued:
“Under the C.P.L. § 690.55 … there is a provision that allows the Court to pay us our money if there is no … other provision in law which would authorize payment…” [TR 3/25/2010].
26
The Decision and Order rested on the State Supreme Court’s
jurisdiction and statutory authority under C.P.L. § 690.55(1)(a),
which states that:
”(1)Upon receiving property seized pursuant to a search warrant, the court must either: (a)Retain it in the custody of the court pending further disposition thereof pursuant to subdivision two or some other provision of law…” (A29).
The NYPD argues against the applicability of the case of
Matter of Documents Seized Pursuant to a Search Warrant, 124
Misc.2d 897 (Sup. Ct., Criminal Term, NY County, 1984), because
the case deals with government retention of business records,
(BR47). On the contrary, Documents @ 898, holds that:
“The Court’s authority to control the disposition of property seized pursuant to its warrant is established by statute (C.P.L. 650.55) and by long usage (citations omitted)… Moreover, property seized pursuant to a search warrant technically remains in the custody of the Court, and the District Attorney or property clerk possesses the property only as an officer of the court, subject to the court’s direction and disposition. (Citations omitted).”
The case of Documents , cited in the Decision and Order, also
makes it clear that an action for Replevin is not available
during the pendency of criminal proceedings, where monies seized
by search warrant have been designated as criminal evidence.
“Moreover, apart from invoking this Court’s authority to control the disposition of items seized pursuant to its process, the petitioner has no adequate remedy. An
27
action for Replevin is unavailable where the property sought to be recovered is being held as evidence in a pending criminal proceeding.” Documents @ 899.
The District Court in U.S. v. $490,920 in U.S. Currency, 911
F.Supp. 720 (SDNY 1996), interpreted New York's statutory warrant
and seizure scheme:
New York's statutory warrant and seizure scheme, see N.Y. Crim. Proc. Law §§ 690.05-690.55 (McKinney 1995) is jurisdictional in nature. Although neither New York state courts nor the Court of Appeals has directly resolved this issue, I interpret New York's warrant and seizure scheme as providing the state court with in rem jurisdiction until such court relinquishes its jurisdiction upon full compliance with its final disposition order regarding the seized property.
New York's Criminal Procedure Law provides that “[a] search warrant is a court order and process directing a police officer ... to conduct: (a) a search of designated premises ... for the purpose of seizing designated property ..., and to deliver any property so obtained to the court which issued the warrant.” Id. § 690.05(2)(a). “Upon receiving property seized pursuant to a search warrant, the court must either: (a) Retain it in the custody of the court pending further disposition thereof ...; or (b) Direct that it be held in the custody of the person who applied for the warrant ..., upon condition that upon order of such court such property be returned thereto or delivered to another court.” Id. § 690.55(1).
Even if the court directs another person to retain custody of the property, the “property seized pursuant to a search warrant technically remains in the custody of the court, and the District Attorney or property clerk possesses the property only as an officer of the court, subject to the court's direction and disposition.”
28
Unlike the lower Criminal Court, the Court below also had
equity jurisdiction over the release of seized funds and to
enforce its own orders. The Decision and Order held that:
“Contrary to the NYPD’s view of this Court’s lack of equity power, however – a view founded upon the distinct and limited jurisdiction of the New York City Criminal Courts – this Court possesses both the discretion and equity jurisdiction to enforce its orders notwithstanding the claimed irregularities. See People v. Salzone, 98 Misc.2d 131, 132 (Crim. Ct., Kings Co. 1978)”(A27-A28).
The NYPD attempts to distinguish the case of Salzone, supra,
on the grounds that the funds in question, unlike those in
Salzone , have been legally seized.(BR44). On the contrary, it
makes no difference to the Supreme Court’s equity powers whether
the funds were seized pursuant to an arrest or pursuant to a
search warrant where there was merely a showing of “probable
cause.”
The NYPD argues that the State Supreme Court cannot simply
allocate the funds held by the NYPD Property Clerk under a theory
of equity, and cites as a controlling authority, Boyle v. Kelley,
42 NY2d 88 (1977) (BR35-37).
The case of Boyle v. Kelley, 42 NY2d 88 (1977), relied upon
by the NYPD, is not on point. Boyle involves the procedures to be
used to recover money from the NYPD Property Clerk in a criminal
case which was dismissed in favor of the defendant. This is
distinguishable from the pending case of the Posners involving a
29
felony indictment, where the criminal proceedings were handled by
the New York State Supreme Court, Criminal Part, County of New
York.
Furthermore, NYPD's claim that Boyle v. Kelley, 42 N.Y.2d 88
(1977) requires that a replevin action must be filed to release
money from the Property Clerk was overruled by federal decisions
which declared Sec. 14-140 unconstitutional and related NYS
decisions which stated that a replevin action was not needed.
See, McClendon v. Rosetti, 460 F.2d 111 (2d Cir. 1972 ("McClendon
I"); McClendon v. Rosetti, 369 F.Supp. 1391 (Dist. Ct., SDNY
1974) ("McClendon II"); McClendon v. Rosetti, 1993 WL 158525
(Dist. Ct., SDNY 1993) ("McClendon III"); Moreno v. City of New
York, 69 N.Y.2d 432, 515 N.Y.S.2d 733 (1987); See also, Property
Clerk, New York City Police Dept. v. Ford, 30 Misc.3d 301, 914
N.Y.S.2d 594 (Sup. Ct., NY Co., Nov. 24, 2010).
In the Bondy Memo., counsel for Louis Posner argued that:
The NYPD cites a series of New York City criminal court cases for the premise that Your Honor lacks subject matter jurisdiction over the instant issue as a sitting Supreme Court Justice. See Memorandum at 9. The cases are inapposite. Unlike the New York City Criminal Courts, the Supreme Court has equity jurisdiction to Order release of the seized funds to pay reasonable counsel and expert fees so as to ensure that Posner’s due process and fair trial rights are protected. See e.g. People v. Salzone, 98 Misc.2d 131, 132 (Kings County., Crim Ct. 1978)(A124).
30
In its Memorandum of Law in Support of Vacatur, dated March
15, 2010, the NYPD likewise erroneously relied on the case of
People v. Fysekis, 164 Misc.2d 627 (Crim. Ct, Bronx Co. 1995)
(criminal courts do not possess any inherent equity powers and
thus are not authorized to declare desk appearance tickets null
and void.). (A114). The NYPD should have known that while the
lower Criminal Court lacks equity powers, the State Supreme
Courts have equity powers. Likewise, NYPD’s reliance on Empire
Eng. Corp. v. Mack, 217 NY 85, 94 (1916), a civil appeal
involving a construction contract dispute, is not on point.
(BR37).
II. UNDER NEW YORK LAW, A BROADER SIXTH AMENDMENT RIGHT TO COUNSEL OF CHOICE AND FOR LIVING EXPENSES FROM SEIZED ASSETS IS RECOGNIZED THAN UNDER THE FEDERAL STATUTES
The NYPD does not dispute that People v. Martinez, 151
Misc.2d 641 (Sup Ct, NY County, 1991), held that “under New York
law a broader Sixth Amendment right to counsel is recognized than
under the federal statutes; i.e., the defendant is accorded a
right to counsel of his choice; he must be accorded a reasonable
opportunity to select and retain counsel, Id. At 650 (citations
omitted),” (BR44-45). Martinez stated that:
The New York courts, however, recognize a broader Sixth Amendment right to counsel. While the Right to
31
Counsel Clause of the NY Constitution is more restrictive than that of the Sixth Amendment of the US Constitution, the New York Court of Appeals has interpreted the NY Constitution to provide far more expansive protection to a defendant than its Federal counterpart. (People v. Bing, 76 NY2d 331, 338-339 [1990]; People v. Davis, 75 NY2d 517, 521 [1990]; People v. Hobson, 39 NY2d 479, 483-484 [1976].) In People v. Settles,46 NY2d 154, 161 (1978)), the Court of Appeals stated: ”So valued is the right to counsel in this State (NY Const, art I, §6), it has developed independent of its Federal counterpart (US Const, 6th Amdt). Thus, we have extended the protections afforded by our State Constitution beyond those of the Federal-- well before certain Federal rights were recognized“.
The principle that right to counsel in New York encompasses right to counsel of choice was recognized by the New York Court of Appeals in People v. Arroyave (49 NY2d 264 [1980]):
“It is certainly well established that the right to counsel, guaranteed by both the Federal and State Constitutions ... embraces the right of a criminal defendant to be represented by counsel of his own choosing ... As a necessary corollary to this right, a defendant must be accorded a reasonable opportunity to select and retain his counsel ...
“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 retain counsel of his own choosing is protected ... In short,
32
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.” (People v. Arroyave, 49 NY2d 264, 270-271, supra; see also, People v. Tineo, 64 NY2d 531 [1985].)
The NYPD argues in its brief that the Court should have
distinguished between clean or legitimate funds and unclean or
illegitimate funds. First of all, this argument was never brought
up by the NYPD in its Order to Show Cause, and supporting
affirmation and memorandum of law (A67-A119), and accordingly,
this argument has not been preserved for appellate review. This
argument was first brought up in the form of a Reply Letter,
dated March 23, 2010, by the DA, which is not the appellant in
this appeal (A125-A152).
NYPD cites the case of Caplin & Drysdale v. U.S., 491 U.S.
617 (1989), a federal case involving defendants “running a
massive drug importation and distribution scheme alleged to be a
continuing criminal enterprise (CCE) in violation of 21 U.S.C. §
848.” (BR41). The Caplin & Drysdale case is distinguishable from
the instant case on various grounds. This federal in rem statute
relates to 21 U.S.C. § 881, which specifically deals with
narcotics forfeiture. The federal government has separate
statutes to deal with criminal forfeiture, 18 U.S.C. § 982 and
33
civil forfeiture, 18 U.S.C. § 981. In fact, the Second Circuit
has stressed that “forfeiture is a harsh and oppressive procedure
which is not favored by the Courts.” United States v. $31,990 in
U.S. Currency, 982 F.2d 851, 856 (2d Cir. 1993) (quotation marks
omitted).
In U.S. v. $876,915.00 U.S. Currency, More or Less, 874 F.2d
104 (2d Cir. 1989), the Second Circuit refused to follow Caplin &
Drysdale and affirmed the release of $100,000 from funds subject
to forfeiture to pay legitimate counsel fees in criminal
proceeding. The Court of Appeals found that where two courts
have concurrent jurisdiction over a res, the one taking
possession first acquires exclusive jurisdiction to the extent
necessary for the appropriate control and disposition of the
property.
In Caplin & Drysdale , supra @ 627, the federal statute
provides for the “so-called ‘relation back’ provision, where
Congress dictated that ‘[a]ll right title and interest in
property’ obtained by criminals via the illicit means described
in the statute ‘vests in the United States upon the commission of
the act giving rise to forfeiture’.” [21 U.S.C. § 853(c)]. No
such similar “relation back” provision exists in Admin. Code §
14-140 or any of the New York State or New York City forfeiture
statutes. Accordingly, unlike the Court in Caplin & Drysdale, the
34
Court below had exclusive jurisdiction over the monies seized by
the NYPD.
In Caplin & Drysdale, supra @ 617, counsel for the criminal
defendant never received Court approval to use forfeitable
proceeds for payment of its attorneys’ fees, and the criminal
defendant agreed in his guilty plea that all forfeitable proceeds
listed in his indictment would be subject to forfeiture. In the
instant case, all of the attorneys’ fees were approved by the
Court below, and Louis Posner agreed in his plea that all fees
and expenses approved by the Court below would be exempt from
forfeiture.
Finally, Caplin & Drysdale was decided well before the
"Civil Asset Forfeiture Reform Act of 2000", Pub. L. No. 106-185
(hereinafter referred to as “CAFRA”), which applies to all
federal civil forfeiture proceedings commenced on or after August
23, 2000. CAFRA was the most comprehensive revision of US civil
asset forfeiture laws and allowed claimants to recover interest
and attorneys fees.
The Decision and Order noted that “the lack of any
forfeiture action by either the District Attorney or the NYPD for
more than one and one-half years” (A28).
Since the commencement of the criminal case in July 2008 and the
35
indictment of the Posners in September 2008, the DA never
commenced an Article 13-A forfeiture proceeding.
Article 13-A includes various procedural safeguards to
ensure that a defendant’s Constitutional rights are protected.
C.P.L.R. § 1317 requires that the claiming authority move to
confirm the order of attachment within 5 days, see C.P.L.R.
1317(b), and the claimant must show a substantial probability
that it will prevail on the issue of forfeiture. See Morgenthau
v. Citisource, Inc., 68 N.Y.2d 211, 215 (1986); see also C.P.L.R.
§ 1316 (Order of attachment on notice), C.P.L.R. § 1317 (Order of
attachment without notice).
The Court of Appeals has stated that in light of these and
other required safeguards, C.P.L.R. “article 13-A satisfies
minimum procedural due process requirements.” Citisource, 68
N.Y.2d at 221.
If all of a defendant’s assets are seized in connection with
an Article 13-A forfeiture action, the defendant may move
pursuant to C.P.L.R. § 1312[4], added by 1990 amendment, for an
order modifying the provisional remedies in place to permit
release of funds for payment of both living expenses and “bona
fide attorneys’ fees and expenses for the representation of the
defendant in the forfeiture proceeding or in a related criminal
matter thereto…”
36
The only statutory caveat is that such payment cannot be
“otherwise available from assets of the defendant which are not
subject to such provisional remedy.” The statute merely requires
the movant to submit an affidavit “establishing the
unavailability of other assets...”
While the DA never commenced an Article 13-A forfeiture
proceeding, it was still appropriate for the Court below to look
to the statutory provisions under Article 13-A in exercising the
Court’s discretion to release funds to the Posners’ attorneys and
litigation experts, and for their living expenses.
Under C.P.L.R. § 1312(4), the court may modify or vacate a
provisional remedy to permit the defendant to obtain funds for
the payment of his reasonable living expenses, costs and expenses
relating to the maintenance, operation and preservation of the
subject property. See Morgenthau v. Allocca, N.Y.L.J., Sept. 25,
1995, at 29, col. 1 (Sup. Ct., N.Y. Co. 1995) (Court signed
“numerous orders releasing funds for the continuation of the
business and the personal use of the officers.”) The movant must
establish by an affidavit the unavailability of other assets
belonging to him or her which are not the subject of attached
funds for payment of such living expenses.
In Dillon v. Marelli, 185 Misc. 2d 461, 713 N.Y.S.2d (Nassau
Co. Ct. 2000) claimant’s counsel was awarded $55,000 in just
37
interim attorneys’ fees. The Court found that the award of
counsel fees was “reasonable under all of the circumstances to
date, including the substantial time and effort expended on
defendant’s motion to dismiss…” The Court further allowed for
the payment of other expenses, including the funeral bill and
administration and accounting fees, pursuant to the language of
C.P.L.R. § 1312[4] for “the payment of reasonable living
expenses.”
C.P.L.R. Article 13-A also contains C.P.L.R. § 1311[4] which
allows the court to invoke the escape mechanism of that statute
permitting the release of funds to a defendant upon a showing of
hardship, injustice or a prima facie showing of entitlement to
the money.
Similarly, in a criminal forfeiture proceeding under PL §
480, Criminal Forfeiture – Felony Controlled Substance Offenses,
PL § 480.30 provide that the “provisional remedies” authorized by
Article 13-A are “available in an action for criminal forfeiture
… under the same terms, conditions and limitations as provided”
in C.P.L.R. § 1312, which includes the Constitutional protections
for payment of:
reasonable living expenses, other costs or expenses related to the maintenance, operation, or preservation of property which is the subject of any such provisional remedy or reasonable and bona fide attorneys' fees and expenses for the representation of
38
the defendant in the forfeiture proceeding or in a related criminal matter relating thereto. [C.P.L.R. § 1312(4)].
III. THE COURT BELOW DID NOT ABUSE ITS DISCRETION IN ISSUING ORDERS TO RELEASE FUNDS FOR REASONABLE ATTORNEYS’ FEES, EXPERTS’ FEES AND LIVING EXPENSES
The Court below did not abuse its discretion issuing orders
to release funds for reasonable attorneys’ fees, experts’ fees,
and living expenses; and in directing the NYPD Property Clerk to
comply with the payment of Court Orders.
The assets seized are not contraband, i.e. property for
which ownership by itself constitutes a crime, including smuggled
goods, stolen money from a bank robbery, narcotics, and automatic
weapons. Accordingly, the Court below had complete discretion to
order the release of the seized proceeds towards the payment of
reasonable and necessary fees and expenses.
The NYPD cites the cases of Morgenthau v. Efargan, Slip Op.
November 2, 2005, Sup Ct, NY County, Index No. 401214/05 [A130-
146], and District Attorney, New York County v. Efargan, 12
Misc.3d 1186A, 2006 NY Slip Op 514562U (Sup. Ct., NY County, June
1, 2006).(BR41-43). Again, these cases and arguments were never
brought up by the NYPD in its Order to Show Cause, and supporting
affirmation and memorandum of law (A67-A119), and accordingly,
this argument has not been preserved for appellate review. These
cases and arguments were brought up in the form of a Reply
39
Letter, dated March 23, 2010, by the DA, which is not the
appellant in this appeal (A125-A152). Moreover, these
Unpublished Opinions, involving a $23,592,896 forfeiture
proceeding under Article 13-A, have no precedential value.
The NYPD then cites that ADA Miner “understood Justice
Shulman’s decision to be based upon the common law understanding
that People should not benefit from ill-gotten gains and that one
has no ownership rights in stolen money,” citing, M. Scholl,
Judge Clarifies Rules to Tap Frozen Funds, 6/29/2006 NYLJ, 1
(col. 3) (BR43). Again, these arguments were only brought up by
the DA in its Reply Letter, dated March 23, 2010, and
accordingly, were not preserved for appellate review.
Notwithstanding the above, the DA’s interpretation is
unsupported by the law, as indicated in the commentary in New
York Criminal and Civil Forfeitures, by Steven L. Kessler, Lexis
Nexis, 2007 Edition, pp. 4-184 – 4-185, @ Footnote 11,:
This article contains quotes from counsel for both sides in the Efargen case. The prosecutor, predictably, claimed that it was a “huge case in the area of asset forfeiture,” asserting that it stands for the proposition that no defendant can secure the release of funds to pay living and legal expenses without proof that the funds are legitimate. Counsel for the defense countered that nothing in the relevant law supports such a reading of the statute. The author of the article, understandably confused by the conflicting views, sought the opinion of a former federal prosecutor and now a partner at Steptoe and Johnson, who provided a more dispassionate perspective in line with the view of this Treatise. “As I interpret this
40
Court’s ruling, had these defendants been able to demonstrate that these funds were legitimately derived, that certainly would have been an important factor in persuading the Court to unfreeze the money to pay for legal fees.” The attorney cautioned, however, that one should “not read this opinion as necessarily requiring such a showing in every case,” and opined that he did not “believe the judge intended to read such an element into the statute.” As we also noted above, the attorney pointed out the fact that “the Court previously released about $58,000 to the various criminal defendants to be used to pay for living expenses and legal fees, apparently without requiring any proof that the money was clean.”
In the instant case, there was never any evidentiary hearing
to determine whether the assets held by the DA and the NYPD were
from legitimate sources. There is no statutory requirement in New
York State that the defendant must prove that seized funds are
from legitimate sources, before a Court may release seized money
for the payment of reasonable attorneys’ fees and expenses, and
living expenses.
The Court in Morgenthau v. Figliola, 4 Misc. 3d 1025(A), 798
N.Y.S.2d 346 (Sup. Ct. New York County June 2, 2004), found that “the
criminal action poses a serious threat to the liberty interests of the
defendants and C.P.L.R. § 1312(4) specifically allows for the release
of funds to enable defendants to mount a defense in the criminal
action.”
In the Letter Memorandum of Joseph Bondy, dated March 23,
2010 (the “Bondy Memo.”), he states that:
41
“It is well settled that the New York State Constitution, article 1, § 6, protects an accused’s right to counsel of choice. In People v. Martinez, 151 Misc.2d 641 (1991), the Supreme Court specifically stated, “… the People have a duty under the New York State Constitution to obtain a reasonable portion of these forfeited funds for the specific purpose of allowing a defendant to obtain counsel of choice…”(A123)
“Moreover, the Court in Martinez, went on to state:
“In computing the total amount which the prosecution must ensure is made to satisfy New York’s constitutional mandates, such funds are limited to … the amount which the Court deems to be reasonable attorney’s fees in the particular case…”
“In each case, the court must examine the complexity of the factual and legal issues presented, estimate the potential length of the proceedings and order the People to set aside a reasonable amount from which defense counsel of choice may seek compensation.” Martinez at 6 (A123-A124).
The NYPD argues that the Court below awarded attorneys’ fees
and experts’ fees that were unreasonable in the rates charged and
amounts sought. (BR45-BR47). On the contrary, the Court in
Morgenthau v. Clifford, 157 Misc. 2d 331, 597 N.Y.S.2d 843 (Sup.
Ct. N.Y. Co. 1992), appeal withdrawn, 198 A.D.2d 923, 603
N.Y.S.2d 937 (1st Dep’t 1993), rejected the argument that a
reasonable rate the Court should use in its calculations is that
paid to court-appointed counsel under Section 18-B of the state
County Law. The court in Clifford resoundingly rejected that
argument:
42
“There is no indication the legislature attempted to restrict the right of a criminal defendant freely to choose his attorney by any such ceiling. This would make a mockery of a defendant’s choice because what private attorney in his right mind would accept such compensation. The rates paid to 18-B attorneys are woefully inadequate and bear no resemblance to the requirements of attorneys in private practice. If the legislature wanted to impose such a restriction, it hardly needed § 1312(4).
It could have left a defendant whose assets have been seized the avenue taken by other indigent accused persons.”
It makes no difference that this was “a case which was
ultimately settled without a trial but by a plea agreement”
(BR47). The Posners’ case was before the State Supreme Court,
Criminal Part, from July 17, 2008 through April 22, 2010, and
included substantial amounts of time and expenses incurred in
pre-trial motions and in preparing for a trial.
On March 2, 2010, Fogelnest wrote to Judge Obus advising the
Court that the NYPD refused to comply with the Court Orders for
payments. Fogelnest argued that there was no reason to relitigate
the issue of payment of fees and allowances from seized assets,
which was provided for by C.P.L.R. § 1312[4]. Fogelnest advised
the Court below that “Mr. Posner has entered into an agreement
with the Civil Court to pay his rent arrears in lieu of his
family being evicted from their apartment. The first payment is
due on March 5, 2010” (A64-66).
At the hearing before Judge Obus on March 25, 2010, Bondy
43
argued for affirming the Court Orders for living expenses to the
Posners:
“In reliance upon the agreement we had [for living expenses], the Posners went to Housing Court and they negotiated an agreement so as to avoid eviction, that involved their paying certain monies. I believe $13,800 is now the amount currently owed on that agreement, otherwise they will be evicted.”
The NYPD’s contention that the living expenses were
“concocted” by the defendants is an affront to the Court below.
(BR46-BR47) The detailed financial affidavits and budget were
reviewed by the DA and the Court below, supporting and opposition
papers were submitted, and oral argument was held before the
Court below where the People had a full and fair opportunity to
argue their points.
The NYPD unfairly accuses the Court below of granting living
expenses that were “liberally paid out.” (BR46-47). On the
contrary, a budget was submitted by the Posners, which included
rent, utilities, food, insurance, recreation and other reasonable
and necessary expenses. After authorizing two monthly interim
payments, the Court below authorized the living expenses based on
detailed, sworn financial affidavits submitted by the Posners and
a monthly budget for a family of three, including a college age
son, residing in Manhattan in 2009.
Court ordered living expenses from seized funds need not be
a subsistence allowance, but that it is reasonable. In Morgenthau
44
v. Figliola , supra, the government agreed to modify the TRO to
allow the defendants’ business to pay the primary defendant and
his wife $40,000 per month, and his son, also a defendant, a bi-
weekly salary of $4,700.
There is no requirement that living expenses only be paid
during the pendency of a trial. The monthly living expenses were
a sum certain, and there was no basis for the NYPD to object to
the residual January 2010, the February 2010 and March 2010 Court
Orders for living expenses.
Neither the DA nor the NYPD ever appealed the prior Decision
and Order by Judge Obus awarding the Posners monthly living
expenses. In fact, the Notice of Appeal fails to state that NYPD
is appealing any of the intermediate orders of the Court below.
(A22). Moreover, the NYPD has not appealed any of the individual
orders for living expenses. (A2-A20). Finally, the Reply Letter,
dated March 25, 2010, from the DA, which raises new allegations
and arguments (A158-A171, BR21-B27), that
were not in the NYPD’s moving papers (A67-A119), and accordingly,
were not preserved for appellate review.
IV. NYPD’s Commencement of a Forfeiture Action Under NYC Admin Code § 14-140 Does Not Divest the Court Below of Its Exclusive Jurisdiction Over the Seized Monies
NYPD erroneously claims that its commencement of a
forfeiture proceeding divests the Supreme Court of its authority
45
to order payments from the monies held by the Property Clerk
(B35, A83-A92). The NYPD argues that all of the claims for
disbursements from seized funds should be relitigated before a
new Judge in State Supreme Court, Civil Part.
On the contrary, the forfeiture proceeding had no effect on
the authority of the Court below. The Decision and Order found
that the “Court therefore finds no useful purpose in further
protracting these proceedings.” (A28) NYPD’s belated attempt to
relitigate and forum shop is a waste of judicial resources.
A forfeiture proceeding under Admin. Code § 14-140 can only
be brought against assets which are no longer related to or
needed as evidence in a pending or completed criminal
proceedings. See McClendon v. Rosetti, 369 F. Supp. 1391
(S.D.N.Y. 1974). Admin. Code, § 14-140 is normally used by the NYPD
Property Clerk for misdemeanor cases in the New York City Criminal
Court involving the seizure of cars driven by individuals arrested
for DWI and for cash confiscated from persons at the time of their
arrests for narcotics offenses.
The request to have the actual Court Orders relitigated as a
forfeiture proceeding under New York City Admin. Code, § 14-140, is
a subversive attempt to blatantly disregard the statutory and
equitable powers of the Court below. Admin. Code, § 14-140 has no
statutory provision for the award of attorneys’ fees, experts’ fees or
46
living expenses. In contrast, Article 13-A of the C.P.L.R., the
forfeiture proceeding normally used for persons indicted in a felony
case, has ample Constitutional protections, including the granting of
reasonable attorneys’ fees, experts’ fees, and living expenses.
[C.P.L.R. § 1312(4)].
At the hearing before Judge Obus on March 25, 2010, Bondy argued
that:
“What we have is a forfeiture proceeding brought under the Administrative Code which would appear to be an end run around Article 13-A … The holding of funds in the name of the People of the State of New York is also, as we see it, an end run around paying us our fees legitimately owed.”
By proceeding under Admin. Code § 14-140, the NYPD can claim
all of the forfeitable assets for its own benefit; whereas, under
Article 13-A, forfeitable assets must be split between the State
of New York and the City of New York. C.P.L.R. § 1349.
A plea made in a criminal proceeding which includes a forfeiture
must comply with C.P.L. § 220.50(6) which provides that any forfeited
proceeds must be distributed in accordance with C.P.L.R. § 1349.
Thus, the NYPD has sought to subvert the CPL requirement that
under C.P.L.R. 1349 that forfeiture proceeds be shared between
New York State and New York City, and instead, seek that all of
the forfeiture proceeds inure to the benefit of the NYPD under
the New York City forfeiture statute.
In order for the Property Clerk to have had jurisdiction
over the seized monies, they would have needed to have
47
consummated their civil proceeding by a motion for summary
judgment or a trial. The disposition of a criminal proceeding is
not determinative of a forfeiture proceeding. See, City of New
York v. Cosme, 67 A.D.2d 852, 413 N.Y.S.2d 20 (1st Dep't 1979);
Property Clerk, New York City Police Dept. v. Hurlston, 104
A.D.2d 312, 478 N.Y.S.2d 906 (1st Dep't 1984); Property Clerk of
New York City Police Dept. v. Ferris, 77 N.Y.2d 428, 568 N.Y.S.2d
577 (1991); Property Clerk, New York City Police Dept. v.
Corbett, 116 Misc.2d 1097, 457 N.Y.S. 175 (Sup. Ct., N.Y. Co.,
Spec. Term 1982); Property Clerk, New York City Police Dept. v.
BMW Financial , 293 A.D.2d 378, 740 N.Y.S.2d 608 (1st Dept. 2002);
Property Clerk, New York City Police Dept. v. Jennings, 11
Misc.3d 1088(A), 819 N.Y.S.2d 851 (Sup. Ct., N.Y. Co. 2006); Clay
v. McCabe, 56 A.D.2d 747, 392 N.Y.S.2d 29 (1st Dept. 1977);
Property Clerk, New York City Police Dept. v. Batista, 111 A.D.2d
135, 489 N.Y.S.2d 739 (1st Dep't 1985); Property Clerk, New York
City Police Dept. v. Conca, 148 A.D.2d 301, 538 N.Y.S.2d 268 (1st
Dept. 1989).
The NYPD further argued that the DA’s waiver of its rights
to insist upon forfeiture does not bind the Property Clerk, which
is an independent agency. Again, this argument was not in the
NYPD’s moving papers (A67-A119), and accordingly, was not
preserved for appellate review.
The NYPD relies upon the cases of Property Clerk, New York
48
City Police Dept. v. Ferris, 77 NY2d 428 (1991); Property Clerk,
New York City Police Dept. v. Deans Overseas Shippers, Inc., 275
AD2d 204 (1st Dep’t. 2000); Property Clerk, New York City Police
Dept. v. Lanzetta, 157 AD2d 600 (1st Dep’t 1990); Property Clerk,
New York City Police Dept. v. Batista, 111 AD2d 135 (1st Dep’t
1985), and Property Clerk, New York City Police Dept. v.
Hurlston, 104 AD2d 312 (1st Dep’t 1984, (B48).
All of these civil asset forfeiture proceedings by the
Property Clerk were commenced after a defendant was acquitted in
Criminal Court of misdemeanor charges involving automobiles or
cash that were seized in connection with a narcotics arrest. The
DA’s waiver of its rights to insist upon forfeiture is irrelevant
to the instant case. The subject case involved a pending felony
criminal case in State Supreme Court where the monies were being
held as evidence under the custody of the Court below.
Furthermore, the Decision and Order held that “subject to this
ruling, the forfeiture proceeding, have having been disposed of
by the guilty plea.” (A28).
SANCTIONS:
49
THIS COURT SHOULD IMPOSE SERIOUS SANCTIONS UPON NYPD, BY VACATING THE CONVICTION AND SENTENCE AND DISMISSING WITH PREJUDICE THE INDICTMENT
This appeal is meritless and in “bad faith” and is a
continuation of the violation of Louis Posner’s constitutional
right to counsel of his choice and a proper criminal defense. The
imposition of serious sanctions against NYPD is warranted,
including vacating the conviction and sentence imposed upon Louis
Posner and dismissing with prejudice the indictment against the
Posners.
The NYPD Property Clerk has refused to comply with the
directive of the Court below to release funds for the payment of
Court Orders, dated February 18, 2010, March 9, 2010, and April
13, 2010. Notices of appeal have been filed only for the Court
Orders dated April 13, 2010. (A2-A20). The Court below denied the
NYPD’s request to vacate the Court Orders, dated February 18,
2010, March 9, 2010 and denied the NYPD’s request for a
preliminary injunction (A25). The NYPD has failed to make a
motion to stay the enforcement of Court Orders, dated February
18, 2010 and March 9, 2010, and accordingly, is in contempt of
Court. [CPLR § 5518].
The Court below, in issuing the Decision and Order, was
mindful of “the inequity of luring the defense into trial
preparation expenditures without ultimate payment.” (A28)
50
The DA wrote in support of the position of the NYPD,
objecting to the use of the seized funds for attorneys’ fees and
other expenses, and explaining the DA’s “departure from the
position previously taken in this litigation”. (B40-B43, A125-
A128). The Court below, in its Decision and Order, rebuked the
DA, stating that:
“The Court also questions the fairness of the District Attorney’s eleventh hour ‘departure from the position previously taken in this litigation,’ in light of its recent ‘analysis [of] the matter in terms of broader policy considerations,’ to oppose payments to which it had regularly consented (March 23, 2010, letter by District Attorney opposing all payments).”(A28, Footnote).
The Decision and Order held that “the Police Department is
directed to comply with all payment orders issued by the Court.”
(A25) By pursuing this appeal, the NYPD has continued its willful
and contumacious conduct in arrogantly disregarding the lawful
Orders of the Court below. Because this appeal was brought by the
NYPD, an agency of the City of New York, against individual
criminal defendants and their retained professionals, monetary
sanctions would not have a sufficient deterrent effect on the
NYPD. Accordingly, the serious sanction against NYPD of vacating
the conviction and sentence of Louis Posner and dismissal with
prejudice of the criminal indictment of the Posners is warranted
in this appeal.
51
A. NYPD Acted in “Bad Faith” By Circumventing Procedural Safeguards of New York State Forfeiture Statutes and Interfering With the Posners’ Constitutional Right to Counsel of Choice and a Proper Criminal Defense [NYS Const., Article 1, §6]
This Court must consider what has been described as the
“incentive issue,” where under § 14-140, monies forfeited go to
the NYPD. As Justice Ira Gammerman remarked in Property Clerk,
New York City Police Dept. v. Hurd, 130 Misc.2d 358, 364, 496
N.Y.S.2d 197, 201 (Sup. Ct. N.Y. Co. 1985), the fact that:
Petitioner's failure to release respondent's property or to timely institute forfeiture proceedings is but another example of what was termed “governmental arbitrariness” in McClendon (see, 460 F.2d 111, 115, supra). The reluctance of the Property Clerk to release seized property, and, possibly the very seizure of that property, is perhaps tainted by the fact that…seized property is paid [to the NYPD] (see, Administrative Code § 435-4.0[e]). The fact that the police can seize property, which is then given into the … Property Clerk, and … inures to the benefit of the police…, suggests at least the appearance of impropriety.
On October 1, 2009, the Court below heard the Posners’
application for a living expense. At the hearing, Fogelnest
argued that:
“Mr. Posner at this point can’t enter any kind of plea. And the reason he can’t enter any kind of plea is that he is under… Severe economic duress. (TR 10/1/2009, p. 8)
If he were to plead and you were to ask him has anyone threatened you, his response would be, [yes], I am threatened with starvation because the prosecutor has improperly taken this money (TR 10/1/2009, pp. 8-9)
52
Because [the prosecutor’s] theory is that he can tie up all of this money and force Mr. Posner into a situation where if he’s going to pay his rent, he’s going to have to plead guilty in order to get some money back.(TR 10/1/2009, p. 10).
On March 2, 2010, Bondy wrote to the Court below that:
The attorneys, the investigator and the forensic accountant have all stopped working on the case pending resolution of this matter. Consequently, we request that the Court schedule a status hearing as soon as possible. (A66). NYPD’s refusal to comply with Orders by the Court below for
the payment of fees resulted in Louis Posner’s attorneys,
Fogelnest and Bondy, and his experts, Kessler and Clemens, to
unilaterally stop working on his case a month before a felony
trial in the Court below, scheduled for April 1, 2010.12 13
Upon information and belief, the Court below ordered Louis
Posner’s attorneys to immediately resume working on his criminal
case. However, the Court below lacked judicial authority to order
the non-attorney experts to continue working on Louis Posner's
criminal case and pending trial without guaranty of payment.
The NYPD refused to honor any of the Court Orders for
payment to counsel for the Posners, Louis Posner’s litigation
experts, and the Posners’ living expenses. NYPD’s willful and
contumacious refusal to comply with lawful Court Orders
12 New York Lawyer’s Code of Professional Responsibility, Disciplinary Rule, DR 2-110(A), an attorney may not withdraw from employment in a pending case without the permission of the Court.
13 Abandonment of a client may be grounds for attorney disbarment. In re Lordan, 217 A.D. 441, 217 N.Y.S. 237 (1st Dept. 1926).
53
interfered with the Posners’ constitutional right to counsel of
choice and to a proper criminal defense.
On March 23, 2010, just one week before trial, Louis Posner
was served with new criminal charges for his filing a complaint
with NYPD IAB against NYPD Vice. After having been released from
bail on his own recognizance for 20 months, Louis Posner was
arrested and jailed by NYPD IAB.
There was an anonymous and confidential telephonic complaint
[under IAB Anonymous Number: 08-245] to NYPD IAB on December 19,
2008 [IAB Complaint No. 08-57647]. Later, on January 18, 2010,
there was an anonymous and confidential walk-in complaint to the
IAB Command Center in Manhattan. A two page printed statement to
NYPD IAB, summarizing the complaint against NYPD Vice, stated,
inter alia, that:
NYC Police – Internal Affairs Complaint No. 08-57647, filed 12/19/08Anonymous Number: 08-245 Vice Enforcement – Manhattan, NYC$10,000 bribe, plus $8,000 monthly May or June 2008late evening, about MidnightLieutenant (white) and detective (black)Raid Vice 7/17/2008---------------------------------------------------
Compliant No. 10-02732 [January 18, 2010]
Vice cops threatened not only to close club, but to arrest all employees and the owner’s wife and seize all bank accounts, unless immediate payment of $10,000 cash. Wife never worked at Club.
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On July 17, 2008, Vice staged a massive raid at the Club and followed through with every one of their threats. Wife later arrested and charged with felonies and jailed for 6 days; Felony charges dropped against wife.
Security approached by crooked Vice cops seeking cash bribes:Orlando Valentin; DOB 4-12-1971, Seagate Police (former)Adriel Commano; sergeant, Seagate private police.
After HLD was shut down, there was a widely circulated rumor that one of the Clubs that was paying off Vice paid a substantial cash bribe to Vice to shut down HLD. Having established the relationship with Vice and paying off Vice on a regular basis, it was easy for a Club to pay additional money to get HLD busted. HLD was the fastest growing and most popular gentlemen’s club in Manhattan and was a threat to the more established gentlemen’s clubs. HLD was rated by every strip club directory as the Number One Club in New York City. In fact, one major online publication rated the HLD gentlemen’s club as the Number One Club in the world. [A170-A171]
As a result of the above January 18, 2010 confidential and
privileged complaint to NYPD IAB, Louis Posner was charged with:
(i) one count of filing a false police report with NYPD IAB
alleging that his professional security advised him that NYPD
Vice attempted to extort money from the HLD Club [ P.L. §
240.50(3)]; (ii) one count of filing a false police report with
NYPD IAB alleging that there was a widely circulated rumor that
another Manhattan gentlemen’s club bribed NYPD Vice to shut down
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the HLD Club [P.L. § 240.50(3)] 14 15; and (iii) one count for
filing a false instrument with NYPD IAB which was the
aforementioned two page written document summarizing the
anonymous and confidential report to NYPD IAB [P.L. § 175.30]
(A170-A171).
B. This Court is Empowered to Impose Serious Sanctions Upon NYPD, Including Vacating the Conviction and Sentence and Dismissal With Prejudice of the Indictment [C.P.L. §§ 210.20[1][h] and 210.40(1)]
The Appellate Division is empowered to impose sanctions upon
the City of New York, including dismissal of cases where the
conduct was deemed so egregious. Justice Gonzalez, presiding
14 The predecessor statute, P.L. § 728, filing of a false police report, was “enacted for the purpose of protecting private citizens from false accusations and the resultant embarrassment, annoyance and aggravation.” People v. Komosa, 47 Misc.2d 634 (Cty. Ct., Cty. Kingston, NY 1965);
15 In some other jurisdictions, the crime of filing of a false report against the police has been held to be unconstitutional as a violation of the First Amendment or discriminatory prosecution against public policy. See Pena v. Municipal Court, 96 Cal.App.3d 77 (Ct. of Appeals, 5th Dist., Cal. 1979) (Defendant’s conviction for filing a false complaint against the police was dismissed on the grounds of a discriminatory prosecution. Legislature did not intend a citizen’s complaint to a law enforcement entity concerning the conduct of that entity or its officers to be a criminal offense, as statute mandating that law enforcement agencies establish a procedure to investigate citizen’s complaints against their officers, indicated its desire that such complaints are to be encouraged.); Hamilton v. City of San Bernardino, 325 F.Supp.2d 1087 (Dist. Ct., C.D. Cal., East. Div., 2004) (California statute making it a misdemeanor for a person to knowingly file false misconduct allegations against a police officer was facially unconstitutional as a violation of the First Amendment and the Equal Protection Clause of the Fourteenth Amendment) ; State v. Crawley, 789 N.W.2d 899 (Minn. Ct. Appeals Sept. 28, 2010) (Minnesota statute that criminalizes knowingly communicating false information regarding police only when that communication alleges misconduct violates the First Amendment’s prohibition against viewpoint discrimination.)
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justice of the Appellate Division, First Department, joined by 17
Associates Justices of the First Department, stated that:
In some egregious cases … the city's failure has been deemed so egregious and the excuse so inadequate that its answer has been stricken (see e.g., Byam v. City of New York, 68 AD3d 798 (2d Dep’t 12/8/09); Martin v. City of New York, 46 AD3d 635 (2d Dep’t 2007); Maiorino v. City of New York, 39 AD3d 601 (2d Dep’t 2007); Rampersad v. New York City Dep’t of Educ., 30 AD3d 218 (1st Dep’t 2006); Rojas v. City of New York, 27 AD3d 323 (1st Dep’t 2006); Hudson v. City of New York, 267 AD2d 351 (2d Dep’t 1999)). Cardozo's Court Reform Suggestions Are Misguided, Misplaced and Insulting, Letters to the Editor, NYLJ, Dec. 17, 2009, at 2 (col. 1).
In a criminal case, the Appellate Division is empowered to
sanction the government by dismissal of the criminal indictment.
People v. Pantino, 106 A.D.2d 412, 482 N.Y.S.2d 334 (2nd Dep’t
1984) (Indictment charging defendant with criminal possession of
controlled substance would be dismissed as sanction for State's
failure to preserve tape recordings of telephone conversations
police officer had with defendant where tapes could have
constituted Brady material.); People v. Springer, 122 A.D.2d 87,
504 N.Y.S.2d 232 (2d Dep’t 1986) (Deliberate destruction by
police of photographs taken during restaurant robbery by a
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surveillance camera violated requirements and spirit of Brady and
warranted dismissal of indictment.)16 17
The Letter Memorandum of Bondy, dated March 23, 2010, and
the Decision and Order both cited the case of People v. Martinez,
151 Misc.2d 641, 648-50 (Sup. Ct. N.Y. Co. 1991)(A29, A123-A124),
in which the NYS Supreme Court held that if a prosecutor fails to
provide for funds from seized assets to further a criminal
defendant’s Sixth Amendment right to counsel, that the prosecutor
should be sanctioned, up to and including, dismissing the
criminal charges against the criminal defendant. Accordingly, the
NYPD was put on sufficient notice that sanctionable conduct may
16 This Court should take judicial notice that co-defendants Cassandra Malandri (“Malandri”) and Falynn Rodriguez (“Rodriguez”), who were arrested at the HLD Club on July 17, 2008, turned down a plea offer and went to trial in Manhattan Criminal Court. See People v. Falynn Rodriguez, Index No. 2008NY053105 (Crim. Ct., N.Y. Co. 2010). At trial, “there appear[ed] to be no tape-recorded conversations between the undercover police officers and defendant Louis Posner’s employees.”(A57). On January 22, 2010, Judge ShawnDya Simpson, dismissed the prostitution charge against Rodriguez; and on January 26, 2010, found Malandri “not guilty” and acquitted her of the prostitution charge.
Rodriguez is now suing the City of New York for false arrest and malicious prosecution. See Fallyn[sic] Rodriguez v. The City of New York, Index No. 11100821 (Sup. Ct., N.Y. Co. 2011). Plaintiff, who had no prior criminal record, alleged in her suit that the DA acted improperly by forcing Rodriguez into a trial because she would not testify against Louis Posner.
17 This Court should also take judicial notice that a gay Manhattan resident is suing NYPD Vice in federal court for false arrest for prostitution, malicious prosecution, excessive force and unreasonable detention. Pinter v. City of New York, 710 F.Supp.2d 408, 436 (SDNY Sept. 13, 2010)(District Court found that if plaintiff's allegation are true, "these circumstances not only reek of entrapment; they are unsettling and inappropriate."); see also, Crosby v. City of New York, 269 F.R.D. 267 (SDNY June 22, 2010) (Arrestees brought federal civil rights action against city, alleging that city was liable for unconstitutional policy or practice of falsely arresting men perceived to be gay on charges of prostitution to support nuisance abatement lawsuits to close businesses viewed by city as undesirable.)
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result in dismissal of the indictment. The Court in Martinez
stated that:
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 noncompliance, 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. (People v. Goggins, 34 NY2d 163 [1974]; Roviaro v United States, 353 US 53 [1957]; C.P.L. 210.40, 210.20 [1] [h] [dismissal of State/Federal action is appropriate sanction where prosecution refuses to disclose identity of informant whose testimony is essential to a fair trial].)
More recently, the U.S. Court of Appeals in U.S. v. Stein,
541 F.3d 130 (2d Cir. 2009), found that: (i.) Prosecutors became
entwined in the control of the accounting firm to ensure the
attorneys’ fees policy was enforced by intervening in accounting
firm’s decision making. (ii.) The government must honor a
defendant’s Sixth Amendment right to counsel, which means more
than simply that the state cannot prevent the accused from
obtaining the assistance of counsel. (iii.) The Sixth Amendment
also imposes on the state an affirmative obligation to respect
and preserve the accused’s choice to seek this assistance, and,
at the very least, the prosecutor and police have an affirmative
obligation not to act in a manner that circumvents and thereby
dilutes the protection afforded by the right to counsel. (iv.)
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Government unjustifiably interfered with indicted accounting firm
employees’ relationship with counsel and their ability to defend
themselves in accounting fraud proceeding by forcing accounting
firm to implement fee policy terminating legal fee advancements
to employees upon indictment, and therefore employees were
deprived of their Sixth Amendment right to counsel. (v.)
Dismissal of indictment would be required to cure any violation,
by the government, of employees’ Sixth Amendment right to
counsel.
Martinez based the authority for sanctions for the dismissal
of the indictment on the statutory predicates of C.P.L. §
210.20[1][h] and C.P.L. § 210.40. Under C.P.L. § 210.20[1][h], an
indictment may be dismissed on the grounds that “There exists
some other jurisdictional or legal impediment to conviction of
the defendant for the offense charged.” Under C.P.L. §
210.40[1], an “indictment...may be dismissed in furtherance of
justice … such dismissal is required as a matter of judicial
discretion by the existence of some compelling factor,
consideration or circumstance clearly demonstrating that
conviction or prosecution of the defendant upon such indictment …
would constitute or result in injustice.” C.P.L. § 210.40[1](e)
requires that the Court consider “any exceptionally serious
misconduct of law enforcement personnel in the investigation.”
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Thus, the misconduct of NYPD may be considered in dismissing an
indictment.
NYPD’s refusal to comply with Court Orders for payments of
fees and expenses from seized assets unfairly interfered with
Posner’s Constitutional rights where: (i) Posners’ attorneys
cannot be paid their legal fees for a pending felony case
approaching trial; (ii) Louis Posner has been denied living
expenses and lacks the money for bail on new charges brought by
the NYPD IAB against the NYPD Vice; (iii) Louis Posner’s
attorneys could not be paid fees for the new criminal charges
alleging the filing of a false police report against NYPD Vice;
and (iv)NYPD files a meritless appeal to further delay ultimate
payment of mandated Court Orders.
For the foregoing reasons, this Court should impose serious
sanctions against the NYPD, including vacating the conviction and
sentence of Louis Posner and dismissal with prejudice of Criminal
Indictment No. 3982/08, pursuant to C.P.L. § 210.20[1][h] and
C.P.L. § 210.40[1].
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CONCLUSION:
THIS COURT SHOULD AFFIRM THE DECISION AND ORDER OF THE COURT BELOW AND SERIOUSLY SANCTION NYPD
For the foregoing reasons, this Court should affirm the
Decision and Order of the Court below in its entirety, and
seriously sanction the NYPD, warranting vacating the conviction
and sentence and dismissal with prejudice of the indictment.
Dated: New York, New YorkApril 19, 2011
Respectfully submitted,
_____________________________JONATHAN S. GOULD, ESQ.Attorney for Defendants-Respondents,
Louis Posner and Betty Posner 603 West 115th Street, Suite 198New York, New York 10025(212) [email protected]
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PRINTING SPECIFICATIONS STATEMENT
This brief was prepared with Microsoft Word 2007, using
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Dated: New York, New YorkApril 19, 2011
Respectfully submitted,
_____________________________JONATHAN S. GOULD, ESQ.Attorney for Defendants-Respondents,
Louis Posner and Betty Posner 603 West 115th Street, Suite 198New York, New York 10025(212) [email protected]
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