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United States v. Hosseini

August 16, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
AMIR HOSSEINI AND HOSSEIN OBAEI, DEFENDANTS.



The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge

MEMORANDUM OPINION AND ORDER

On February 26, 2007 a jury found defendants Amir Hosseini ("Hosseini") and Hossein Obaei ("Obaei") guilty on all counts in the multicount superseding indictment. They were jointly convicted of a racketeering conspiracy in violation of the Racketeering, Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. §1962*fn1 )(Count 1*fn2 ) and of Section 1956(a)(1)(B)(i) money laundering and a money laundering conspiracy (Counts 3, 10 and 11). In addition, Hosseini was found individually guilty of money laundering (Count 4), two counts of mail fraud under Sections 1341 and 1342 (Counts 97-98) and dozens of counts of structuring transactions to avoid reporting requirements in contravention of 31 U.S.C. §5324(a)(3) and (d)(2) (Counts 13-63).

For his part, Obaei was also found guilty of aiding and abetting a narcotics trafficking conspiracy under Section 2 and 21 U.S.C. §846 (Count 2), four more counts of money laundering (Counts 6-9), three counts of Section 1344(2) bank fraud (Counts 94-96), two counts of mail fraud (Counts 99-100) and numerous structuring counts (Counts 64-71, 73-93).

Based on the RICO, money laundering and structuring convictions, the government now pursues the forfeiture aspects of the superseding indictment, seeking forfeiture of significant assets pursuant to Section 1963 (RICO), Section 982(a) (money laundering) and 31 U.S.C. §5317(c)(1)("Section 5317(c)(1)"*fn3

(structuring). Both defendants and the government had agreed before trial that this Court rather than the jury should decide the extent of forfeiture and that it may for that purpose make all necessary findings of fact based on the jury verdict, the trial evidence and the parties' submissions.

In sum, this opinion holds that each defendant's entire stock and any other ownership interest in Amer Leasing Sales, American Car Exchange and SHO Auto Credit (collectively "Dealerships"*fn4 are forfeitable, as are also the real estate properties specified in the superseding indictment. But this opinion further holds that the government has failed to prove entitlement to the additional money forfeiture that it has sought.

Background

In brief summary, over a period of many years Hosseini and Obaei conducted a racketeering conspiracy through their ownership of the three used car Dealerships. Hosseini owned Amer Leasing Sales, Obaei owned American Car Exchange, and SHO Auto Credit was owned by Obaei and Hosseini together. They used the Dealerships in large part to sell cars to drug dealers who would pay for the vehicles with large cash payments (thousands of dollars in small denominations) that the jury necessarily found were proceeds of illegal drug sales. Hosseini and Obaei would then attempt to conceal--to launder--those illegal proceeds by means of creative paper work documenting the sales.

In a further effort to hide their large illicit cash business, Hosseini and Obaei took great care not to deposit $10,000 or more in cash into their business bank accounts at any one time (to avoid triggering the banks' mandatory IRS reporting requirements). Indeed, the trial evidence demonstrated that among the three Dealerships over a multiyear span, millions of dollars of cash deposits into the business bank accounts were divided up into thousands of deposits, only five of which equaled $10,000 or more (Government Exhibit ["G. Ex."] Schindler 4, 7, 11). On some days four, five or even seven deposits of less than $10,000 each were made into the same account (G. Ex.Schindler 12).

Burden of Proof

As stated earlier, Congress has provided for criminal forfeiture based on Hosseini's and Obaei's RICO, money laundering and structuring convictions, and the parties have agreed that this Court should make any necessary factual findings for that purpose. At the outset that calls for a decision as to the government's burden of proof on that issue.

In the context of 21 U.S.C. §853(a) criminal forfeiture in drug cases, United States v. Patel, 131 F.3d 1195, 1200 (7th Cir. 1997)(citations omitted) has taught:

It is by now well settled that criminal forfeiture under section 853(a) is considered an element of the defendant's sentence, rather than an element of the underlying crime. As such, the government need only establish its right to forfeiture by a preponderance of the evidence, the standard applicable at sentencing, rather than by proof beyond a reasonable doubt.

And United States v. Vera, 278 F.3d 672, 673 (7th Cir. 2002) has held that because with Section 853(c) forfeiture "there is no 'prescribed statutory maximum' and no risk that the defendant has been convicted de facto of a more serious offense," Apprendi v. New Jersey, 530 U.S. 466 (2000) did not change the rule that forfeiture may be decided "on a preponderance standard." Although United States v. Swanson, 394 F.3d 520, 526 n.2 (7th Cir. 2005) noted that the then-anticipated decision in United States v. Booker, 543 U.S. 220 (2005) might affect that rule, the post-Booker decision in United States v. Melendez, 401 F.3d 851, 856 (7th Cir. 2005) has reiterated that criminal forfeiture may be decided by a preponderance and not a beyond-a-reasonable-doubt standard.

In addition to those broad statements that are not tied to any specific statutory language of Section 853(a), both money laundering forfeiture (in Section 982(b)(1)) and structuring forfeiture (in Section 5317(c)(1)(B)) explicitly incorporate the procedures used in Section 853(a) forfeiture, certainly suggesting that a preponderance standard should also apply under those statutes (cf. Swanson, 394 F.3d at 526, applying Vera to Section 982(a)). With no statutory language pointing to a different result, this opinion will therefore apply a preponderance standard under Sections 982(a) and 5317(c)(1).

One court has found that a close reading of the statutory language of RICO Section 1963 presents a different situation altogether, requiring the use of a beyond-a-reasonable-doubt standard in forfeiture proceedings under that section (United States v. Pelullo, 14 F.3d 881, 901-06 (3d Cir. 1994)). But other courts--finding guidance in Libretti v. United States, 516 U.S. 29, 38-39 (1995)--have come to the opposite conclusion that Section 1963 also requires only proof by a preponderance of the evidence (United States v. Corrado, 227 F.3d 543, 550-51 (6th Cir. 2000); United States v. DeFries, 129 F.3d 1293, 1312 (D.C. Cir. 1997)(per curiam)). And other courts ...


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