United States District Court, S.D. Florida, Miami Division
REPORT AND RECOMMENDATIONS CONCERNING CROWN PAWN
LLC39;S PETITION TO SET ASIDE FORFEITURE
JONATHAN GOODMAN UNITED STATES MAGISTRATE JUDGE.
a criminal trial and the forfeiture of several hundred
thousand dollars of fraudulently obtained assets (primarily
jewelry, watches, and purses) that Crown Pawn LLC purchased
from the criminal defendants, Crown filed a petition to
determine its interest in the assets and requested an
ancillary hearing. [ECF Nos. 133; 152');">152');">152');">152');">152');">152');">152');">152]. United States
District Judge Joan A. Lenard referred the petition to the
Undersigned. [ECF No. 240]. The parties fully briefed the
matter, and on January 16, 2018, I held an evidentiary
hearing on Crown39;s petition. [ECF Nos. 152');">152');">152');">152');">152');">152');">152');">152; 172; 325].
raises two statutory theories to support its claim. First,
Crown argues that it was an innocent, bona fide
purchaser for value of the items. It contends that it was the
victim of a crime because the
defendants39; criminal scheme involved duping Crown into
purchasing the expensive goods that the defendants had
Crown argues that it has a superior interest in the forfeited
property. In support, Crown again characterizes itself as a
victim of the defendants39; crimes. Crown then argues that
it already had a vested interest in the goods before a crime
occurred because the crime of fraud was not consummated until
Crown was itself duped into purchasing the stolen items.
theories generate one overarching issue: can a pawnshop that
was not criminally charged portray itself as a
victim of a criminal scheme to fraudulently
obtain luxury items and thus prevent the United States from
forfeiting its interest in those items? Under the specific
circumstances of the relevant factual scenario developed in
this case, the answer is “no.”
bottom, Crown has not met its burden of establishing either
of the two theories upon which it relies. That is because if
Crown39;s view of being a victim is correct, then its
self-described status is based, at least in part, on its own
conduct. To a significant degree, Crown is responsible for
its own predicament because it did not conduct sufficient due
diligence when confronted with myriad flags warning of
suspicious and atypical activity underlying the
defendants39; offer to sell it the forfeited items.
for the reasons outlined below, the Undersigned
respectfully recommends that Judge Lenard
deny Crown39;s petition.
Procedural and Factual Background
as a recording-music company employee, Defendant James
Sabatino conned designer clothing, handbag, and jewelry
businesses into loaning him luxury goods, on the false
premise that the items would be featured in music videos and
photo shoots and then returned. But instead of returning the
items, Sabatino conspired with others, including Defendants
Denise Siksha Lewis and Valerie Kay Hunt, to steal the
merchandise and then sell some of it to pawnshops in Fort
Lauderdale and Deerfield Beach, Florida.
federal grand jury indicted Sabatino, Hunt, and Lewis, among
others, on various mail and wire fraud charges stemming from
the scheme. [ECF No. 3]. The Indictment also included
forfeiture allegations, which alleged that upon conviction of
any of the charged violations, the defendants must each
forfeit to the United States any property, real or personal,
which constitutes or is derived from proceeds traceable to
such violation, under 18 U.S.C. § 981(a)(1)(C). [ECF No.
3, pp. 11-12].
Indictment alleged that the property subject to forfeiture
included, among other things, the following luxury goods:
i. Three (3) Judith Leiber Couture clutch bags, seized on or
about August 12, 2015;
ii. Two (2) Audemars Piguet watches, seized on or about
August 12, 2015;
iii. Eleven (11) Tiffany & Co. bracelets and watches,
seized on or about August 12, 2015;
iv. Thirteen (13) Jimmy Choo handbags and shoes, seized on or
about August 12, 2015;
v. Three (3) Alexander Wang tote bags, seized on or about
August 12, 2015;
vi. One (1) Judith Leiber Couture clutch bag, seized on or
about August 19, 2015; and
vii. Ten (10) Jimmy Choo handbags and shoes, seized on or
about August 19, 2015.
[ECF No. 3, 12');">p. 12].[1" name="FN1" id=
and Hunt entered into written plea agreements, and both pled
guilty to Count 1 of the Indictment, which charged conspiracy
to commit mail and wire fraud in violation of 18 U.S.C.
§ 1349. [ECF Nos. 98; 100; 162-63]. As a result, the
Court entered preliminary orders of forfeiture against Lewis
and Hunt, which forfeited, subject to third-party interests,
their right, title, and interest in the goods listed above.
[ECF Nos. 133; 186].
receiving notice,  Crown filed its petition to set aside the
forfeitures, claiming that it was a bona fide
purchaser of the forfeited property. [ECF No. 152');">152');">152');">152');">152');">152');">152');">152, p. 4');">p. 4');">p. 4');">p. 4].
Crown alleged that it “purchased [the forfeited items]
from [Hunt and Lewis] as a bona fide purchaser for
value without knowledge that said individuals were not owners
rightfully in possession of the items of personal property or
obtained [sic] by the same fraud.” [ECF No. 152');">152');">152');">152');">152');">152');">152');">152, p. 4');">p. 4');">p. 4');">p. 4].
Crown also alleged that it “had no reason to be
concerned or suspicious that the items of personal property
where obtained by the Defendants through fraud or
collusion[.]” [ECF No. 152');">152');">152');">152');">152');">152');">152');">152, 5');">p. 5');">5');">p. 5]. Crown similarly
alleged that it “had no reason to suspect that the
transactions were anything but legitimate to exercise
reasonable and due care to protect itself from
fraud[.]” [ECF No. 152');">152');">152');">152');">152');">152');">152');">152, p. 6');">p. 6]. Moreover, Crown
described itself as “an innocent
victim of a fraudulent scheme specifically
targeted by the Defendants to be victimized[.]” [ECF
No. 152');">152');">152');">152');">152');">152');">152');">152, 5');">p. 5');">5');">p. 5 (emphasis added)].
in a bench memorandum, Crown also claimed that, apart from
its bona-fide-purchaser status, it had a superior
interest in the forfeited assets. [ECF No. 313, pp. 4');">p. 4');">p. 4');">p. 4-5].
Crown argued that the crime of fraud “could not have
been consummated nor could have attached to the property . .
. at any time frame until after [Crown] paid [the defendants]
money or cash for the personal property sought to be
forfeited[.]” [ECF No. 313, p. 4');">p. 4');">p. 4');">p. 4]. Crown claims that
“[t]he criminal act of fraud did not occur nor was the
crime completed or consummated until [Crown] came in
possession of the luxury items and paid the Defendants for
the goods.” [ECF No. 313, pp. 4');">p. 4');">p. 4');">p. 4-5]. As a result, Crown
concludes, its “interest in the luxury goods at the
time of the commission of the acts which gave rise to the
fraud were vested in [Crown] rather than after the commission
of the crime, ” making it “clearly superior to
any right that the Defendants had in the property under the
law of the State of Florida.” [ECF No. 313, 5');">p. 5');">5');">p. 5].
Undersigned held an evidentiary hearing on Crown39;s claims
on January 16, 2018.[3" name="FN3" id=
"FN3">3] Aside from Crown, no other third-party
claimants have filed a judicial claim to the forfeited items
at issue, and the time for filing a claim has
-one U.S.C. § 853(n)(6) sets forth the burden of proof
and statutory grounds third-party petitioners must meet to
claim forfeited property:
after the hearing, the court determines that the petitioner
has established by a preponderance of the evidence that--
(A) the petitioner has a legal right, title, or interest in
the property, and such right, title, or interest renders the
order of forfeiture invalid in whole or in part because the
right, title, or interest was vested in the petitioner rather
than the defendant or was superior to any right, title, or
interest of the defendant at the time of the commission of
the acts which gave rise to the forfeiture of the property
under this section; or
(B) the petitioner is a bona fide purchaser for value of the
right, title, or interest in the property and was at the time
of purchase reasonably without cause to believe that the
property was subject to forfeiture under this section;
the court shall amend the order of forfeiture in accordance
with its determination.
determining whether a petitioner has met its burden, the
district court must consider relevant portions of the
criminal record, including sentencing, and additional
evidence presented at a hearing. § 853(n)(5); United
States v. Cohen, 3 Fed.Appx. 531');">243 Fed.Appx. 531, 533-34 (11th Cir.
2007) (upholding district court39;s reliance on facts
established in criminal case when considering third-party
claim to forfeited assets).
general, ancillary proceedings are not a forum in which third
parties can re-litigate issues that were already determined
in the criminal case, such as that property was subject to
forfeiture. See United States v. Davenport, 668 F.3d
1316, 1321 (11th Cir. 2012) (holding that third-party
claimants “may not relitigate the merits of a
forfeitability determination”); see also United
States v. Fabian, 3d 636');">764 F.3d 636, 638 (6th Cir. 2014)
(“like every circuit to have reached the issue, we hold
that third parties lack statutory standing to challenge a
district court39;s determination . . . that certain
property is subject to forfeiture.”).
Superior Interest Under § 853(n)(6)(A)
it failed to assert its superior-interest claim in its
petition, Crown arguably lacks statutory standing to advance
that theory of claim. See United States v. Soreide,
1 F.3d 1351');">461 F.3d 1351, 1355 (11th Cir. 2006) (holding that
superior-interest claim not asserted in petitions was now
“belated” and “not asserted as required by
the statute”); accord United States v. White,
5 F.3d 1073');">675 F.3d 1073, 1079 (8th Cir. 2012) (“Courts typically
look askance at belated attempts to add new or additional
grounds for relief to third-party petitions.”).