Opinion
97 Cr. 639 (SAS)
April 14, 2004
Patrick Bennett, New York, for Defendant
Lisa P. Korologos, Assistant United States Attorney, New York, New York, For the Government
OPINION AND ORDER
On October 20, 2003, Patrick Bennett, appearing pro se, moved for: (i) mandatory Judicial Notice pursuant to Federal Rule of Evidence 201(d); (ii) a hearing on the issue of whether the Government fulfilled its obligation to recover proceeds from his crimes before it attempted to forfeit substitute assets; and (iii) appointment of counsel to represent him in the aforementioned motions. On November 3, 2003, Bennett wrote a letter to the Court, seeking to: (i) vacate Judge Martin's Amended Opinion and Order dated October 10, 2003; and (ii) vacate the Forfeiture Order pursuant to Rule 59(e). Bennett also requested that the Court rule on his August 23, 2003 motion to recuse Judge Martin, and Bennett's judicial notice motion. See Government's Memorandum in Opposition to Patrick Bennett's Various Motions ("Gov't Mem.") at 6. This opinion addresses each of these motions.
Unless otherwise noted, the following facts are uncontested.
A. Patrick Bennett's Conviction and Sentencing
In 1997, Patrick Bennett was charged with criminal activity arising from a massive fraud and money laundering scheme involving the Bennett Funding Group, an office equipment leasing company run primarily by Bennett and the Bennett Management and Development Corporation. See Gov't Mem. at 2.
In March, 1999, a jury found Bennett guilty of two counts of conspiracy to obstruct justice and commit perjury, one count of obstruction of justice, and four counts of perjury. The jury failed to reach a verdict on remaining counts. On June 10, 1999, after a retrial before Judge Martin, a jury convicted Bennett of two counts of securities fraud, five counts of bank fraud, thirty counts of money laundering, and five counts of engaging in monetary transactions with criminally derived property. The jury also returned a special verdict requiring Bennett to forfeit $109,088,889.11. See id. at 2-3.
On January 28, 2000, Judge Martin held a sentencing hearing concerning Bennett's assets. On April 28, 2000, Judge Martin sentenced Bennett to 30 years of imprisonment followed by three years of supervised release, and ordered him to forfeit $109,088,889.11 (the "Forfeiture"). Id.
On May 24, 2002, Judge Martin resentenced Bennett to 22 years of imprisonment. Id.
B. Forfeiture Proceedings
On October 6, 2000, Judge Martin entered a First Amended Order of Forfeiture against Bennett (the "Forfeiture Order"). The Order found that Bennett had an ownership interest in two properties held in the name of Gwen Bennett, Bennett's wife, and one property held in the name of the Andrick Irrevocable Trust (the "Properties"). The Forfeiture Order vested all of Bennett's rights to the Properties in the United States of America and, pursuant to 18 U.S.C. § 982(b)(1), authorized the recovery of any substitute assets necessary to complete the forfeiture. The Forfeiture Order further provided that the court would enter a final order of forfeiture pursuant to 21 U.S.C. § 853(n) "[u]pon adjudication of all third-party interests." Gov't Mem. at 3-4, citing the Forfeiture Order at 5. Bennett and Gwen Bennett opposed entry of the Forfeiture Order, raising some of the same points addressed here. Judge Martin rejected each of their arguments. See United States v. Bennett, No. 97 CR 639, 2000 WL 1505986, at *2 (S.D.N.Y. Oct. 6, 2000).
C. Bennett's Appeals
In 2000, Bennett appealed both his judgment of conviction and the Forfeiture Order. On February 12, 2001, however, Bennett withdrew his appeal of the Forfeiture Order and stipulated that the appeal would be deemed "withdrawn with prejudice" should he fail to reinstate it within thirty days. Bennett did not reinstate that appeal. See Gov't Mem. at 4-5.
Bennett filed another appeal in 2002, again challenging his conviction, his sentence, and the Forfeiture Order. Bennett asserted, among other things, that the Forfeiture Order improperly authorized the recovery of substitute assets because the Government did not first attempt to forfeit the actual fruits of the crimes of which he was convicted. The Court of Appeals affirmed Bennett's conviction and sentence, and rejected each of his challenges to the Forfeiture Order. See United States v. Bennett, No. 02-1379 (2d Cir. Sept. 19, 2003), slip op. at 4. Although Bennett sought appellate review of this decision, on January 12, 2004, the Supreme Court denied his petition for certiorari. See Bennett v. United States, — U.S. —, 124 S.Ct. 1112, No. 03-7654 (2004).
D. The Ancillary Proceeding
On November 9, 2000, Gwen Bennett filed a Notice of Petition for a hearing pursuant to 21 U.S.C. § 853(n)(2), contending that she had a financial interest in the Properties. On February 6, 2001, Wanda Koen, Trustee for the Andrick Irrevocable Trust, served a Notice of Petition pursuant to 21 U.S.C. § 853(n), claiming that she also had an interest in one of the Properties. On August 14 and 18, Judge Martin conducted an ancillary hearing with respect to these third-party claims (the "Ancillary Proceeding"). On September 24, 2003, Judge Martin issued an Opinion and Order dismissing each claim. Though Gwen Bennett subsequently filed additional motions in the Ancillary Proceeding pursuant to Rule 59 and 60 of the Federal Rules of Civil Procedure, on April 5, 2004, I issued an Opinion and Order denying Gwen Bennett's motion. See United States v. Bennett, No. S1 97 Cr. 639, 2004 WL 736928, at *5 (S.D.N.Y. Apr. 5, 2004). II. DISCUSSION
As a preliminary matter, Bennett has requested that this Court delay disposition of these motions pending resolution of his habeas petition ( see 03 Civ. 1852). As disposition of these motions is not contingent upon the outcome of that proceeding, Bennett's request is denied.
A. Bennett Lacks Standing to Assert These Motions
The Government contends that Bennett lacks standing to make substantive motions in the Ancillary Proceeding because his rights to the Properties were fully adjudicated and are now vested in the Government. Bennett responds that he has standing because: (1) no final order of forfeiture has been entered against him, and (2) his sentence has not been finally adjudicated.
A defendant lacks standing to make substantive motions in a forfeiture proceeding ancillary to his criminal case where he has lost his interest in the properties at issue. The statute allowing for participation in such ancillary proceedings provides that "[a]ny person, other than the defendant, asserting a legal interest in property which has been forfeited to the United States pursuant to this section may . . . petition the court for a hearing to adjudicate the validity of his alleged interest in the property." 21 U.S.C. § 853(n)(2) (emphasis added). "The Order of Forfeiture acts to divest the defendant of any remaining interest in the property." United States v. Pellulo, 178 F.3d 196, 202 (3d Cir. 1999) (holding that the defendant's prior forfeiture order removed his interest in his residence).
Bennett is precluded from requesting a hearing because the Forfeiture Order expressly divested him of any interest in the Properties. The Forfeiture Order provides:
All of PATRICK R. BENNETT'S right, title and interest in and to all of the assets, whether real, personal and/or mixed, is hereby vested in the United States of America, pursuant to 18 U.S.C. § 982(a)(1), as property traceable to money laundering in violation of 18 U.S.C. § 1956, and/or as substitute assets pursuant to 18 U.S.C. § 982(b)(1)(incorporating, inter alia, 21 U.S.C. § 853(p)).
Bennett also lacks standing to make motions in the Ancillary Proceeding on behalf of his wife and/or the Andrick Irrevocable Trust because he is no longer a party to that proceeding. See United States v. Hernandez-Escarsega, 886 F.2d 1560, 1576 (9th Cir. 1989) (ruling that the defendant could not complain about a due process violation pertaining to a third-party).
Forfeiture Order at 3-4.
Bennett asserts that he retains standing to sue in the Ancillary Proceeding because no final order of forfeiture has been entered and because his sentence, of which the Forfeiture Order is a part, has not been fully adjudicated. Bennett is wrong on both counts. Although no final order or forfeiture has been entered as to third-party claimants, the Forfeiture Order is final as to him. "A forfeiture order, whether preliminary or final as to third-party claims, is a final order as to the defendant." United States v. Christunas, 126 F.3d 765, 769 (6th Cir. 1997). In addition, because the Supreme Court has denied Bennett's petition for certiorari, his sentence is now final. See Bennett v. United States, 124 S.Ct. 1112, No. 03-7645 (2004). Accordingly, Bennett lacks standing to bring any substantive motions in the Ancillary Proceeding.
B. This Court Lacks Jurisdiction to Consider Bennett's Claims
Even assuming, arguendo, that Bennett has standing to bring his motions, this Court lacks jurisdiction to hear them. Following an order of forfeiture levied as part of a criminal sentence, a district court must hold an ancillary proceeding if "a third party files a petition asserting an interest in the property to be forfeited" so long as the forfeiture does not consist solely of a money judgment. Fed.R.Crim.P. 32.2(c)(1). Accordingly, a district court retains jurisdiction to consider third-party claims in such a proceeding. See 21 U.S.C. § 853(n) (providing a means for third parties to obtain their property if it has been forfeited). The district court does not, however, retain jurisdiction over matters arising out of the criminal sentence once that sentence is appealed. "Although the district court has jurisdiction to consider third party claims to property . . . after a notice of appeal is filed, the district court lacks jurisdiction to consider a defendant's claims." United States v. Libretti, 38 F.3d 523, 527 (10th Cir. 1994); see also Berman v. United States, 302 U.S. 211, 214 (1937) (finding that the district court lost jurisdiction to modify its sentence upon appeal of that sentence).
This Court lost jurisdiction over matters regarding Bennett's criminal case upon Bennett's appeal to the Second Circuit. See United States v. Bennett, No. 02-1379 (2d Cir. Sept. 19, 2003) (affirming Bennett's sentence and rejecting many of the arguments regarding the Forfeiture Order raised in the instant motions). The Court's remaining jurisdiction is limited to considering third-party claims in the ancillary proceeding pursuant to 21 U.S.C. § 853(n).
Although Bennett contends that this Court has proper jurisdiction arising under Federal Rule of Criminal Procedure 32.2(c)(2), that subsection confers no rights on a defendant. It merely delineates the circumstances under which a court must enter a final order of forfeiture following an ancillary proceeding. Fed.R.Crim.P. 32.2(c)(2) ("When the ancillary proceeding ends, the court must enter a final order of forfeiture by amending the preliminary order as necessary to account for any third-party rights. If no third party files a timely petition, the preliminary order becomes the final order. . . .").
C. Bennett's Motions Are Without Merit
Finally, and briefly, even if Bennett had standing and this Court had jurisdiction, each of Bennett's motions lacks merit.
1. Motion for Judicial Notice
Bennett demands that the Court take judicial notice of various "facts." Under Federal Rule of Evidence 201(d), a court must take judicial notice, upon a party's request, of certain facts. Rule 201(b) provides that a court may take judicial notice of a fact when the fact is "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." F.R.E. 201(d). When considering whether to take judicial notice pursuant to Rule 201(b), courts rarely go beyond the record unless the facts in question are of common knowledge or are capable of certain verification. See Alvery v. United States, 302 F.2d 790, 794 (2d Cir. 1962) (citing Brown v. Piper, 91 U.S. 37, 42 (1875)).
Bennett asks this Court to take judicial notice of, inter alia, what his testimony would have been in the Ancillary Proceeding had he provided it. The Federal Rules of Evidence do not provide any basis for taking judicial notice of such extra-record information, as it is neither a matter of common knowledge, certain of verification, generally known within the jurisdiction, nor capable of accurate and ready determination.
As the Government has noted, Bennett could have offered these facts through testimony or an affidavit in the Ancillary Proceeding, but declined to do so. See Gov't Mem. at 6.
2. Motion for a Hearing on Whether the Government Appropriately Forfeited Substitute Assets
Bennett requests a hearing to determine whether the Government inappropriately forfeited substitute assets before determining whether assets available from the criminal enterprise were sufficient to cover the mandated amount. No such hearing is necessary. As an initial matter, it is not entirely clear that the Properties were forfeited as substitute assets rather than as property traceable to the crimes. Specifically, in the Forfeiture Order, Judge Martin determined that the Properties were subject to forfeiture "as property traceable to money laundering in violation of 18 U.S.C. § 1956 and/or as substitute assets pursuant to 18 U.S.C. § 982(b)(1). Forfeiture Order at 3-4 (emphasis added). Moreover, the Forfeiture Order, levied following a hearing pursuant to United States v. Fatico, 57 F.2d 707 (2d Cir. 1978), expressly provides that the Government was not able to locate assets that equaled the full sum of the forfeiture. "[A]s a result of acts and omissions of the defendant, the Government, upon exercise of due diligence, has been unable to locate said $109,088,889.11." Forfeiture Order at 3. The Forfeiture Order has since been affirmed by the Second Circuit Court of Appeals.
Bennett contends that a new hearing is necessary to determine whether the forfeiture of substitute property is authorized because the Fatico hearing did not refer to any of the money laundering charges. See Patrick Bennett's Response to the Government's Opposition ("Response Mem."), at 10-11. In a Memorandum Order issued with the Forfeiture Order on or about October 6, 2000, Judge Martin expressly found that "the forfeiture of substitute property is authorized in this case. Because the Government established at the Fatico hearing that amounts well in excess of the value of the substitute property were diverted to the defendant in connection with the money laundering scheme, it is entitled to forfeiture of the substitute assets." Memorandum Order at 3 (emphasis added).
3. Motion for Appointment of Counsel
Bennett further requests appointment of counsel for assistance with these motions. As discussed, Bennett lacks standing to bring these motions, the Court lacks jurisdiction to hear them, and they are entirely without merit. Additionally, as Bennett is already represented by counsel in his pending habeas proceeding — his only remaining recourse for these matters — he has neither the right to, nor the need for, appointed counsel with respect to these motions.
4. Motion to Recuse Judge Martin
Bennett also requests recusal of Judge Martin, but this issue is moot. Judge Martin is no longer a federal judge and no longer presides over any case in which Bennett is a party.
5. Motion to Vacate Judge Martin's Amended Opinion and Order dated October 20, 2003 and His Preliminary Order of Forfeiture Pursuant to Fed.R.Civ.P. 59(e)
As discussed earlier, Bennett lacks standing to bring these motions and the Court lacks jurisdiction to hear them. Additionally, Bennett seems to have withdrawn his "Rule 59(e)" motion: "Patrick Bennett requests the Court to re construe (sic) this Motion as one for further Judicial Notice of the facts contained within . . ." Response Mem. at 12.
III. CONCLUSION
For the foregoing reasons, each of Bennett's motions is denied. The Clerk of the Court is directed to close these motions [docket #218].
SO ORDERED.