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U.S. v. LOREN-MALTESE

United States District Court, Northern District of Illinois, Eastern Division


February 6, 2003

UNITED STATES PLAINTIFF,
v.
BETTY LOREN-MALTESE DEFENDANT.

The opinion of the court was delivered by: John F. Grady, District Judge

MEMORANDUM OPINION CONCERNING THE GOVERNMENT'S MOTION TO FORFEIT SUBSTITUTE ASSETS OF THE DEFENDANT LOREN-MALTESE
The government has filed two motions seeking the forfeiture of specific items of real and personal property as "substitute assets" of the defendant Betty Loren-Maltese, pursuant to 18 U.S.C. § 1963(m). The jury found that the defendant had acquired the sum of $3,250,000.00 in cash as a result of her racketeering activity and forfeited the defendant's interest in that amount of cash. The government has been unable to locate anything like that amount of cash in the possession of or under the control of Loren-Maltese, despite what the court finds to have been diligent efforts, as described in the affidavit of agent William A. Paulin, attached to the government's response filed February 5, 2003. The defendant Loren-Maltese has made no disclosure of her assets, and specifically refused to do so in connection with the pre-sentence investigation in this case. As matters now stand, the court is satisfied that, unless the government is entitled to forfeiture of the "substitute assets" listed in its two motions, there is no likelihood of any successful collection of any portion of the $3,250,000.00 cash forfeiture.

We turn, then, to the statute the government relies on to authorize forfeiture of the substitute assets. Section 1963(m) provides that if, "as a result of any act or omission of the defendant," any of the property forfeited in the case

(1) cannot be located upon the exercise of due diligence;
(2) has been transferred or sold to, or deposited with, a third party;
(3) has been placed beyond the jurisdiction of the court;
(4) has been substantially diminished in value; or

(5) has been commingled with other property which cannot be divided without difficulty;
the court shall order the forfeiture of any other property of the defendant up to the value of any property described in paragraphs (1) through (5)."
There are two aspects of the statute that the parties focus on. First, whether it can be said that any difficulty the government is having in locating the forfeited cash is "a result of any act or omission of the defendant." In her memorandum opposing the government's motions, the defendant argues that the government has not shown that its failure to discover the cash is "a result of any act or omission of the defendant." The government responds that the defendant has kept the $3,250,000.00 "out of financial accounts, thereby shielding it from governmental scrutiny." Response at 2. The defendant seems to think that there must be proof of some affirmative act of concealment, as opposed to a mere omission to disclose. We do not read the statute to require proof of affirmative acts of concealment. It says "omission," and we believe that can reasonably be read to mean an omission to make known to the government the location of any cash defendant derived from her racketeering.

The other inquiry under the statute is whether any of the five conditions for substitute forfeiture have occurred as a result of the defendant's omission. Surely item (1) has occurred: the cash cannot be located upon the exercise of due diligence. Moreover, each of the other five conditions for forfeiture may have occurred as a result of one or more "acts" of the defendant: we know that the defendant has transferred money to third parties — to casinos, to attorneys and to her mother, having discussed these expenditures with the parties as recently as last week. It appears likely also that the $3,250,000.00 has been "substantially diminished in value"(item 4) as a result of defendant's expenditures.

The court believes that the government has made out a case for the substitute forfeitures requested. The government correctly points out that there is no apparent danger of seizing amounts in excess of the total amount owed, inasmuch as the total value of the substitute assets is far less than the $3,250,000.00. And, of course, the defendant will be given an appropriate credit for amounts recovered from any jointly and severally liable co-defendants. Finally, the interest of third parties will be protected by the procedures available to any of them who desire to assert claims to any of the substitute assets.

The court will enter this date the proposed orders submitted by the government.

20030206

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