FINDINGS OF FACT
Following a bench trial held February 17, 1993 on the United States' complaint for civil forfeiture filed March 2, 1990,
and claimant's verified claim of interest filed March 15, 1990, I make the following findings of fact.
In September 1989, the Federal Bureau of Investigations ("F.B.I.") seized in Philadelphia a 1973 Rolls Royce, vehicle identification number SRH-16266 ("the Rolls Royce"), registered in Florida to Anthony "Spike" Gregorio ("Gregorio") of Fort Lauderdale, Florida. (See Complaint, at P 5). The Rolls Royce has been impounded in Philadelphia for the duration of this civil forfeiture proceeding. (See id. at P 6).
The government's evidence is comprised largely of information provided to it by three former members of the La Costa Nostra ("L.C.N.") organized crime family -- Philip Leonetti ("Leonetti"), Thomas DelGiorno ("DelGiorno"), and Nicholas "Nicky the Crow" Caramandi ("Caramandi") -- who are now cooperating government witnesses who have on several occasions testified about the illegal activities of members of the L.C.N. crime family. (N.T. at 30-34).
The Rolls Royce was purchased in January 1986 by Nicodemo Scarfo, Sr. ("Scarfo"), boss of the L.C.N. family.
(N.T. at 49). Mr. Scarfo purchased the car from Cream Puff Motors in Florida for approximately $ 25,000. The majority of the purchase price was paid in cash, with the remainder of the price credited for a Lincoln Continental trade-in. (N.T. at 49, 63). Mr. Scarfo had the Rolls Royce registered in Florida to Mr. Gregorio, an associate who maintained a Florida residence which Mr. Scarfo often occupied. (Exh. G-2; N.T. at 50).
In late 1985 or early 1986, Mr. Gregorio drove Mr. Scarfo, Mr. Leonetti and others in the Rolls Royce to a meeting at a Fort Lauderdale nightclub with John DiSalvo ("DiSalvo"), a drug trafficker from the Philadelphia area. At that meeting, Mr. DiSalvo told Mr. Scarfo that he would pay Mr. Scarfo $ 200,000 from the trafficking of phenyl-2-propanane, a methamphetamine precursor commonly known as P2P. (See Complaint at P 11; N.T. at 45-46, 53-54).
In August 1986, Mr. Scarfo called a meeting of L.C.N. family members at the Florida residence maintained by Mr. Gregorio. One of persons who attended that meeting was Francis "Faffie" Iannarella ("Iannarella"), a "made-member" of the L.C.N. organization.
Mr. Iannarella flew from Philadelphia to Florida carrying $ 50,000 in cash collected as "street taxes" from drug traffickers.
In preparation for the Florida meeting, Mr. Gregorio met Mr. Iannarella at a Florida airport and transported Mr. Iannarella and the drug proceeds
to a Fort Lauderdale hotel in the Rolls Royce. The cash was ultimately given to Mr. Scarfo. (N.T. at 54-56).
Between 1987 and 1988, the claimant in this case, Oscar B. Goodman ("Goodman"), a criminal defense attorney from Las Vegas, Nevada, represented Mr. Leonetti in three separate criminal trials in Philadelphia. At the first trial, in December 1987, United States v. Nicodemo Scarfo, et al, 87-CR-00258, Mr. Scarfo, Mr. Leonetti and others were acquitted of federal drug charges (Exhs. G-6, G-7, G-8; N.T. at 38, 91-93, 115-16); at the second trial, in May 1988, Mr. Scarfo, Mr. Leonetti and others were acquitted in state court of murdering L.C.N. member Salvatore Testa ("Testa") (Exh. D-4; N.T. 91-94, 116-17). At the third trial, in September 1988,
United States v. Nicodemo Scarfo, et al, 88-00003, Mr. Scarfo, Mr. Leonetti and others were found guilty in federal court of violating the Racketeer Influenced Corrupt Organizations ("RICO") statute as well as federal drug laws. (Exhs. G-5A, G-5B, G-5C, G-9; N.T. at 28-29, 38, 117-118). The RICO and drug trafficking convictions were affirmed by the Third Circuit, see United States v. Pungitore, 910 F.2d 1084 (3d Cir. 1990), certiorari denied, 111 S. Ct. 2009 (1991), and the defendants are currently serving prison sentences.
Following the jury's unexpected verdict in favor of the defendants in the Testa murder trial on May 10, 1988, the defendants' attorneys, friends, family and followers gathered at the Four Seasons Hotel in Philadelphia, where a spontaneous celebration erupted.
Mr. Goodman testified that "nothing was spared as far as expense," that for several hours "Cognac that . . . was $ 800 a bottle [was] imbibed by everyone there" and "$ 100 bottles of champagne were being shaken like it was a World Series victory and splattered all over the wall."
(Exhs. D-2, D-3, D-4; N.T. at 94-102).
At the end of the evening Mr. Goodman was approached by Mr. Scarfo's son, Nicodemo Scarfo, Jr., concerning the bill for the festivities. The cost of the party exceeded $ 16,000, and Mr. Goodman testified that no one present at the party had sufficient funds to pay the bill. The younger Scarfo and others requested that Mr. Goodman sign for the bill, and Mr. Goodman did so.
(Exh. D-5,; N.T. at 97-99). All liabilities of Mr. Goodman to the Four Seasons Hotel were ultimately satisfied.
(N.T. at 153-165).
At some point shortly after the Four Seasons party, the younger Scarfo offered Mr. Goodman the Rolls Royce in return for Mr. Goodman's paying the Four Seasons bill. A deal was struck whereby Mr. Goodman was to receive, in return for his paying the Four Seasons bill, title to the Rolls Royce and $ 1,500 contributions from each of three other attorneys present at the party. (Exhs. D-6, D-7; N.T. at 99-101).
On October 5, 1988, in Las Vegas, Mr. Gregorio endorsed the title to the Rolls Royce over to Mr. Goodman. (N.T. at 102-103; Exh. D-1). It is not clear whether Mr. Goodman was present in Las Vegas when Mr. Gregorio signed title to the Rolls Royce over to him. (N.T. at 103). The transfer of title from Mr. Gregorio to Mr. Goodman was never recorded. (N.T. at 133-34). On March 1, 1989, Mr. Goodman paid $ 4,000 for repairs to the Rolls Royce, which included stripping the vehicle of electronic surveillance devices. (Exh. D-8; N.T. at 103-107).
When the Rolls Royce was seized by the F.B.I in Philadelphia on September 15, 1989, Mr. Goodman had not yet taken physical possession of the vehicle. (N.T. at 107). In response to the government's claim for civil forfeiture of the Rolls Royce pursuant to 21 U.S.C. § 881, Mr. Goodman filed a verified claim in interest asserting innocent ownership of the Rolls Royce pursuant to 21 U.S.C. §§ 881(a)(4)(C) and 881(a)(6).
CONCLUSIONS OF LAW
I make the following conclusions of law:
1. The government has established probable cause that the Rolls Royce was used to facilitate illegal drug transactions under 21 U.S.C. § 881(a)(4).
2. The claimant has sufficient standing to contest forfeiture of the Rolls Royce.
3. When title was transferred to the claimant on October 5, 1988, the claimant received sufficient ownership of the Rolls Royce to assert an innocent ownership defense under 21 U.S.C. § 881(a)(4)(C).
4. The claimant had sufficient notice to signal that Mr. Scarfo and his L.C.N. associates were involved in illegal drug trafficking and that the Rolls Royce was connected to such activity to require inquiry.
5. The claimant has failed to establish that he was not willfully blind to the fact that the Rolls Royce was used to facilitate the trafficking of illegal drugs.
6. Failure to prove lack of willful blindness alone is sufficient to defeat the claimant's contention of innocent ownership under 21 U.S.C. § 881(a)(4)(C).
7. The Rolls Royce is forfeited to the United States pursuant to 21 U.S.C. § 881(a)(4).
I. PROBABLE CAUSE FOR FORFEITURE
In a civil forfeiture proceeding pursuant to 21 U.S.C. § 881, the government has the initial burden of showing probable cause for forfeiture. United States v. 55,518.05 in U.S. Currency, 728 F.2d 192 (3d Cir. 1984); United States v. Parcel of Real Property Known As 6109 Grubb Road, Etc., 886 F.2d 618 (3d Cir.), rehearing denied, 890 F.2d 659 (1989). To meet its burden, the government must present information "adequate and sufficiently reliable to warrant the belief by a reasonable person that the property was used to further the trafficking of illegal narcotics." 6109 Grubb Road, at 621. "All that is required is that a court be able to look at the 'aggregate' of the facts and find reasonable grounds to believe that the property probably was derived from drug transactions." United States v. A Parcel of Land, Buildings, Appurtenances and Improvements, Known As 92 Buena Vista Avenue, Rumson, New Jersey, et al., 937 F.2d 98, 104 (3d Cir.), affirmed on other grounds, U.S. , 113 S. Ct. 1126 (February 24, 1993).
The government may use hearsay evidence to establish probable cause for forfeiture. See 6190 Grubb Road, 886 F.2d at 621 (proof of probable cause based upon prior testimony); 92 Buena Vista Road, 937 F.2d at 104 (proof of probable cause set forth in criminal indictment); United States v. One 1986 Chevrolet Van, 927 F.2d 39 (1st Cir. 1991) (proof of probable cause set forth in affidavit).
I find that the government has established probable cause that the Rolls Royce was used to facilitate illegal drug transactions. F.B.I. Agent Randal Wolverton ("Agent Wolverton") testified that "Mr. Leonetti told [him] that he, Philip Leonetti, Nicodemo Scarfo and a few other people rode in that Rolls Royce that [Agent Wolverton] seized from Mr. Scarfo's residence in Fort Lauderdale to the Yesterdays night club in Fort Lauderdale, where Mr. Scarfo met with John DiSalvo, who was a drug dealer from Philadelphia... During this meeting Mr. DiSalvo told Nicodemo Scarfo that DiSalvo would pay Scarfo $ 200,000 from the drug business." (N.T. at 54). Agent Wolverton further testified that "in August of 1986, Nicodemo Scarfo summoned the members of his crime family to the Florida area. One of those summoned was Faffie Iannarella . . . Mr. Iannarella travelled from Philadelphia to Fort Lauderdale by airplane and Mr. Iannarella was picked up at the airport by Spike Gregorio driving the 1973 Rolls Royce that [Agent Wolverton] seized. Mr. Iannarella was carrying with him $ 50,000 in cash that Mr. Iannarella obtained from another drug dealer. Mr. Iannarella was transported from the airport to the hotel in Fort Lauderdale where Mr. DelGiorno, Mr. Iannarella and other members of the Mafia were staying . . . The $ 50,000 was eventually given to Nicodemo Scarfo." (N.T. at 55-56). I find this testimony sufficient for the government to meet its burden of probable cause to believe that the Rolls Royce was used to facilitate illegal drug transactions for purposes of forfeiture under 21 U.S.C. § 881(a)(4).
To contest a forfeiture action, a claimant must have sufficient standing. United States v. Contents of Accounts Nos. 3034504504 and 144-07143 at Merrill, Lynch, Pierce, Fenner and Smith, Inc., 971 F.2d 974, 987-88 (3d Cir. 1992), certiorari denied, 1992 WL 391328 (March 22, 1993). Any "colorable owner of the res or . . . any colorable possessory interest in it" will satisfy the standing requirement. Id. at 987.
Mr. Goodman testified that he received the Rolls Royce in return for paying the bill for a party at the Four Seasons (N.T. at 99-103), and Mr. Gregorio signed title to the Rolls Royce over to Mr. Goodman.
Clearly Mr. Goodman has a colorable interest in the Rolls Royce to support standing to contest its forfeiture.
II. THE INNOCENT OWNER DEFENSE
Once the government has established probable cause for forfeiture, the burden of proof shifts to the claimant to prove, by a preponderance of the evidence, that he qualifies as an "innocent owner."
See United States v. 6109 Grubb Road, 886 F.2d 618, 623-26 (3d Cir. 1989); United States v. RD 1, Box 1, Thompsontown, 952 F.2d 53, 56 (3d Cir. 1992).
The Claimant has Sufficient Ownership to Assert the Innocent Ownership Defense.
A threshold question to the innocent ownership defense is whether the claimant has sufficient ownership interest in the seized property to assert the defense. 92 Buena Vista Avenue, 113 S. Ct. at 1134. In 92 Buena Vista Avenue, the United States Supreme Court, affirming the Third Circuit, held that because "the term 'owner' is used three times [in the statute] and each time it is unqualified . . . such language is sufficiently unambiguous to foreclose any contention that it applies only to bona fide purchasers." Id. The claimant in 92 Buena Vista Avenue obtained her ownership interest in the seized property simply as a gift, and the Supreme Court held that sufficient for her to assert an innocent ownership claim to the property. Id. at 1130.
Here Mr. Gregorio signed title to the Rolls Royce over to Mr. Goodman in Las Vegas, Nevada on October 5, 1988 (N.T. at 102-103; Exh. D-1), but never recorded that certificate with the state. (N.T. at 133-34). Under Florida law,
"a person acquiring a motor vehicle . . . from the owner thereof . . . shall not acquire marketable title to the motor vehicle . . . until he has had issued to him a certificate of title to the motor vehicle." Fla. Stat. ch. 319.22. Although Florida law requires motor vehicle titles to be recorded, see Fla. Stat. ch. 319.03, Florida does not "subscribe to the view that the owner of an automobile should be held to have lost his property, or should be precluded from showing that he does in fact own it, simply because he did not within the ten days after the purchase present the assigned certificate to the State Motor Vehicle Commissioner as required by [statute]." Nash Miami Motors, Inc. v. Bandel, et al, 47 So. 2d 701 (Fla. 1950).
Because Mr. Goodman received title to the Rolls Royce on October 5, 1988, he became an owner of the Rolls Royce as of that date.
Under Florida law, since title was not recorded, a lienholder could have an interest superior to that of Mr. Goodman. In the Matter of Canup Mechanical, Inc. v. Morford, 1 Bankr. 703 (Bkrtcy. M.D. Fla. 1979) (Florida law allowed creditor to obtain lien on vehicle superior to the rights of vehicle's owner prior to owner's recording title with the state). The only challenge to Mr. Goodman's ownership in this action, however, comes from the United States. The Supreme Court in 92 Buena Vista Avenue held that the government "cannot profit from the statutory version of the [relation back doctrine] in § 881(h) until [the claimant] has had the chance to invoke and offer evidence to support the innocent owner defense . . ." 113 S. Ct. at 1137 . Thus the government does not have an interest at this time with which to challenge Mr. Goodman's ownership. Clearly under 92 Buena Vista Avenue Mr. Goodman is an owner whose ownership interest is sufficient to assert an innocent owner defense.
The Claimant Fails to Meet his Burden of Lack of Willful Blindness under 21 U.S.C. § 881(a)(4)(C).
Having found that Mr. Goodman has sufficient ownership interest in the Rolls Royce to assert the innocent ownership defense, I must now determine whether Mr. Goodman satisfies the statutory requirements of that defense. The innocent ownership defense saves from forfeiture a vehicle used to facilitate drug trafficking if the owner can establish that the illegal activity was committed without the knowledge, consent, or willful blindness of the owner. 21 U.S.C. § 881(a)(4)(C).
Lack of willful blindness sufficient to prevail as an innocent owner under § 881(a)(4)(C) means that a claimant must show that he or she has not ignored a signal or suggestion that a vehicle might have been used to facilitate the trafficking of illegal drugs. Such a suggestion might arise from the fact that the vehicle was owned by one accused of drug trafficking. As in this case, once the claimant chooses to ignore the signal, he or she can no longer establish lack of willful blindness to the prior use of the vehicle that would subject it to forfeiture. This case presents the requirements of willful blindness as a matter of first impression in the Third Circuit. The interpretations of courts in other circuits, however, are consistent with my reading of the statute. The Eighth Circuit in United States v. One 1989 Jeep Wagoneer, 976 F.2d 1172, 1175 (8th Cir. 1992), a facilitation case in which the claimant asserted willful blindness under § 881(a)(4)(C), held that "willful blindness involves an owner who deliberately closes his eyes to what otherwise would have been obvious and whose acts or omissions show a conscious purpose to avoid knowing the truth." A Texas district court held, in a case in which an attorney claimed innocent ownership of a seized vehicle as his fee, that under the willful blindness standard the "claimant at least has the responsibility to take the basic investigatory steps necessary to determine that his fees were not being satisfied with a major instrumentality of the crime charged against his client." United States v. 1977 Porsche Carrera 911, 748 F. Supp. 1180, 1186 (W.D. Tx. 1990), affirmed on other grounds, 946 F.2d 30 (5th Cir. 1991).
This reading of willful blindness is true to Congress' intention in including that language in the innocent ownership defense it added to § 881(a)(4) in 1988. The bill was initially introduced in the House of Representatives without the willful blindness language, 134 Cong. Rec. 22,653, 22,672, but members of Congress thought the amendment "would lead to a 'look-the-other-way' defense." 134 Cong. Rec. 24,086 (statement of Rep. Archer). It was feared that "owners will be encouraged . . . to know as little about their property as possible . . ." Id. (statement of Rep. Gibbons). It was in this context that willful blindness was added to the bill, 134 Cong. Rec. 33,193, and the additional language was described as "addressing the cases of individuals who have demonstrated a conscious purpose to avoid the truth." 134 Cong. Rec. 33,288 (statement of Rep. Young). See also 134 Cong. Rec. 33,313 (statement of Rep. Jones) ("These provisions will provide significant legal rights for the innocent, but still ensure that the guilty will be punished."); 134 Cong. Rec. 33,315 (statement of Rep. Davis).
The extensive and prominent role forfeiture has played in this country's jurisprudence also supports my reading of willful blindness. From colonial times until relatively recent years, the common law allowed forfeiture of property used in the commission of criminal activity, and there was no defense for innocent owners of forfeited property. See 92 Buena Vista Avenue, 113 S. Ct. at 1131-34. When Congress added the innocent ownership defense to the various provisions of the drug forfeiture statute, it was in abrogation of this common law history, and I am well advised by the Supreme Court to "approach the task of construing [that amendment] with caution." Id. at 1134. My reading of willful blindness does the least offense to a protection that would-be innocent owners historically did not enjoy at common law.
I find that Mr. Goodman has failed to prove that he was not willfully blind to -- i.e., that knowing what he did about the illegal activities of Mr. Scarfo and Mr. Leonetti, he did not consciously avoid knowledge of -- the use of the Rolls Royce to facilitate trafficking of illegal drugs.
By his own testimony, Mr. Goodman admitted he "didn't care [whose car it was], all [he] wanted was to get recompensed for the monies that [he] laid out," (N.T. at 151), and, when asked if he pursued the reason the car was titled in Mr. Gregorio's name, Mr. Goodman responded, "No. I didn't care." (N.T. at 152).
Mr. Goodman was present -- indeed, he represented Mr. Leonetti -- at the federal drug trial of Mr. Scarfo, Mr. Leonetti and others in 1987. Mr. Goodman testified that his "first involvement with Mr. Leonetti as his attorney was representing him in the drug case where there were allegations that he was part of [a] continuing criminal enterprise and actually participated in the conspiracy and possession of P2P and methamphetamine and the various drug violations concerning methamphetamine. We went to trial on that case in this courthouse, the jury returned a verdict of not guilty on all of those charges involving actual participation in drug offenses." (N.T. at 92; Exh. G-6). While it is true that Mr. Scarfo and his associates were ultimately acquitted of federal drug charges in the 1987 drug case, that does not prevent Mr. Goodman from being on notice to the possibility of the use of the Rolls Royce to facilitate drug trafficking. Further it does not absolve Mr. Goodman of his burden to make an independent inquiry as to the use of the Rolls Royce.
Former L.C.N. member Caramandi testified in the 1987 drug case, at which Mr. Goodman was present, that the L.C.N.'s unwritten rule against involvement in drugs was, at Mr. Scarfo's direction, honored in the breach. (Exh. G-7 at pp. 20-21; N.T. at 139-140). At the same 1987 drug trial, former L.C.N. member DelGiorno testified at length concerning the L.C.N.'s involvement in the trafficking of illegal drugs. (Exh. G-8 at pp. 114-124). Finally, at a trial held in this court on March 31, 1987, at which Mr. Goodman defended former Philadelphia City Council member Leland Beloff against racketeering charges, Mr. Goodman elicited on cross examination detailed information from Mr. DelGiorno regarding the L.C.N.'s involvement in illegal drug trafficking. (N.T. at 136-138). At the Beloff trial on March 31, 1987, Mr. Goodman conducted, under an ethical obligation not to elicit false testimony,
the following cross examination:
Did you attempt to extort Steven Vento, Jr.?
I sent somebody. No, I didn't personally attempt to distort (sic) him.