UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION

Transcription

1 THOMAS P. O BRIEN United States Attorney CHRISTINE C. EWELL Assistant United States Attorney Chief, Criminal Division CHRISTOPHER BRUNWIN Assistant United States Attorney Deputy Chief, Violent & Organized Crime Section STEVEN R. WELK California State Bar No. 1 Assistant United States Attorney Chief, Asset Forfeiture Section FRANK D. KORTUM California State Bar No. 110 Assistant United States Attorney Asset Forfeiture Section 100 United States Courouse 1 Nor Spring Street Los Angeles, California 001 Telephone: (1) -1/10 Facsimile: (1) -1 Steven.Welk@usdoj.gov Frank.Kortum@usdoj.gov Attorneys for Plaintiff United States of America UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) ) RUBEN CAVAZOS, ) aka Doc, et al., ) ) Defendants. ) ) CR FMC GOVERNMENT'S APPLICATION FOR ENTRY OF PRELIMINARY ORDER OF FORFEITURE AS TO REGISTERED TRADEMARKS, PURSUANT TO GUILTY PLEA OF RUBEN CAVAZOS; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF STEVEN R. WELK AND EXHIBITS No Hearing Required

2 Plaintiff United States of America hereby applies for e entry of e proposed Preliminary Order of Forfeiture of Registered Trademarks lodged contemporaneously herewi pursuant to Fed. R. Crim. P..(b) and defendant Ruben Cavazos s entry of a plea of guilty to Count One of e Indictment. This application, which deals solely wi e registered trademarks as to which forfeiture is sought (described in detail below) is supported by defendant's guilty plea, e factual basis stated during defendant s plea proceeding, and e matters set for in e accompanying Memorandum of Points and Auorities and Declaration of Steven R. Welk and Exhibits. 1 Government counsel contacted Angel Navarro, counsel for defendant RUBEN CABAZOS, to inform him of is filing, on June, 00. Undersigned counsel ed a final draft of e accompanying Memorandum of Points and Auorities and e proposed Preliminary Order of Forfeiture of Registered Trademarks to Mr. Navarro on June, 00, requesting at he respond promptly wi comments or objections to e draft. Mr. Navarro 1 The government anticipates at it will seek a separate Preliminary Order of Forfeiture prior to defendant s sentencing for oer assets seized from defendant.

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4 I. INTRODUCTION MEMORANDUM OF POINTS AND AUTHORITIES On January, 00, defendant Ruben Cavazos ( defendant ) entered a plea of guilty to Count One of e Indictment, alleging violations of 1 U.S.C. 1(d). Defendant is scheduled to be sentenced on February, 010. In Count Eighty-Five of e Indictment, e government notified defendant at e government would seek e forfeiture of certain property upon his conviction of one or bo of Counts One and/or Two. As part of his guilty plea, defendant agreed to e forfeiture of all right, title and interest in certain assets acquired or maintained by him as a result of his violation of 1 U.S.C. 1, including ose listed immediately below (e Mongols Registered Trademarks or marks ), and admitted at e marks were subject to forfeiture to e United States: 1. The trademark assigned Registration No. 01 (serial no. 101), issued to Mongol Nation on or about April, 00, purportedly for use in commerce in connection wi promoting e interests of persons interested in e recreation of riding motorcycles.. The trademark assigned Registration No. 1 (serial no. 1), issued to Mongol Nation on or about January 11, 00, purportedly for use in commerce in connection wi promoting e interests of persons interested in e recreation of riding motorcycles. Pursuant to Rule.(b), e government now applies for e entry of e proposed Preliminary Order of Forfeiture of Registered Trademarks (lodged contemporaneously herewi). The government also requests at e forfeiture of e specific property be stated orally at defendant s sentencing and set for in defendant s Judgment and Commitment Order. 1

5 II. ARGUMENT A. The Nexus Between Defendant's Crimes and e Specific Property to be Forfeited Has Been Established by Defendant s Guilty Plea Rule. of e Federal Rules of Criminal Procedure provides, in pertinent part: As soon as practicable after entering a guilty verdict or accepting a plea of guilty or nolo contendere on any count in an indictment or information wi regard to which criminal forfeiture is sought, e court must determine wheer e government has established e requisite nexus between e property and e offense. Fed. R. Crim. P..(b)(1). The Advisory Committee Notes for is provision explain at for e preliminary order of forfeiture, e court must determine "if e property was subject to forfeiture under e applicable statute, e.g., wheer e property represented e proceeds of e offense...." Advisory Committee Notes to Rule., subdivision (a) (000 Adoption). The standard of proof regarding e forfeitability of property in a criminal case, including RICO cases, is preponderance of e evidence. See United States v. Najjar, 00 F.d, - ( Cir. 00) (RICO); United States v. Shryock, F.d, 1 ( Cir. 00) (following Najjar); United States v. DeFries, 1 F.d 1, 11 (D.C. Cir. 1) (RICO); United States v. Hernandez-Escarsega, F.d 10, 1- ( Cir. 1) (interpreting identical language in 1 U.S.C. ); United States v. Bieri, 1 F.d 1 ( Cir. 1) ( ). Thus, e only question before e Court in connection wi e requested entry of e proposed Preliminary Order is wheer e evidence before e Court is enough to establish by a

6 preponderance of e evidence at ere is a nexus between e Mongols Registered Trademarks and e offense(s) at are alleged to render em forfeitable. See Rule.(b)(1), quoted above. The existence or extent of ird-party interests in e marks are determined after e entry of e preliminary order. See United States v. Lazarenko, F.d, ( Cir. 00) ( Upon a finding at e property involved is subject to forfeiture, a court must promptly enter a preliminary order of forfeiture wiout regard to a ird party s interests in e property. ). The preliminary order should be entered promptly in order to avoid unnecessary delay in e forfeiture process and resolve potential ird party rights. United States v. Yeje- st Cabrera, 0 F.d 1, 1 (1 Cir. 00). The defendant need not be present when e preliminary order is entered. United States v. Segal, F.d, - ( Cir. 00). Forfeiture in a RICO case is mandatory where property is determined to be wiin e scope of 1(a). Alexander v. United States, 0 U.S., (1) ( a RICO conviction subjects e violator not only to traditional, ought stringent, criminal fines and prison terms, but also mandatory forfeiture under 1"); United States v. Nava, 0 F.d 111, 11 ( Cir. 00). The scope of at forfeiture auority is extraordinarily broad. See 1 U.S.C. 1(b) ( Property subject to criminal forfeiture under is section includes -... tangible and intangible personal property, incuding rights, privileges, interests, claims, and securities ); Russello v. United States, U.S. 1, (1) (Congress enacted RICO to provide new weapons of unprecedented scope for an assault upon

7 organized crime and its economic roots ); United States v. Busher, 1 F.d 10, 11 ( Cir. 1) (e forfeiture provisions of 1 are purposely broad...[,] designed to totally separate a racketeer from e enterprise he operates ); st United States v. Angiulo, F.d 11, 111 (1 Cir. 10) ( any interests in an enterprise, including e enterprise itself, are subject to forfeiture in eir entirety, regardless of wheer some portion of e enterprise is not tainted by e racketeering activity ); United States v. Segal, F.d, ( Cir. 00) (if a business is forfeited, so are all of its assets, including any subsidiary business at is wholly owned by e forfeited business; ere need not be an independent basis for e forfeiture of e wholly-owned subsidiary). The government is not required to establish e defendant s ownership of e property eier to seize it or to obtain a preliminary order of forfeiture, and ird parties are prohibited from intervening in e criminal case, and cannot complain at ey have to wait for e ancillary proceeding to assert eir rights. Almeida v. United States, F.d, 1 (d Cir. 00); 1 U.S.C. 1(i). As explained in e Advisory Committee Notes to Rule. (000), e Rule was revised wi e intent to eliminate confusion over wheer e extent of e defendant s ownership interest should be determined by e finder of fact. The new rule clarified at e only question upon conviction or a guilty plea is wheer ere is a nexus between e violation of which e defendant has been convicted (or to which he has pled) and e property sought - if ere is, e court should enter an order forfeiting whatever interest a

8 defendant may have in e property wiout having to determine exactly what at interest is. A defendant cannot object to e entry of a preliminary order on e ground at e property at issue does not belong to him. United States v. Schlesinger, F.Supp.d, (E.D.N.Y. 00). Here, defendant (and numerous oers) have pled guilty to Count One of e Indictment. Defendant has admitted as part of his plea (and e undisputed evidence conclusively confirms) at e Mongols Registered Trademarks were acquired and maintained by defendant during and in e course of e operation of e RICO enterprise described in e Indictment, rendering em subject to forfeiture pursuant to 1 U.S.C. 1(a)(1). His admissions also establish at e Mongols Registered Trademarks afforded a source of influence over e RICO enterprise at defendant admits he established, operated, controlled, conducted and participated in e conduct of, rendering e marks subject to forfeiture pursuant to 1 U.S.C. 1(a)() as well. The Criminal forfeiture is part of e defendant s sentence, so it is available only if e defendant is convicted of e underlying substantive offense. Lazarenko, supra. If e defendant is convicted, his interest in e property must be forfeited regardless of what at interest is, so it is not necessary to determine e extent of e interest. The only issues left to be determined concerning ownership are ose of non-defendant ird parties, whose interests are determined in e ancillary process. Only after at process is complete does e government obtain a Final Order of Forfeiture. The defendant s admissions are more an sufficient to establish e forfeitability of e marks, but e Court is not required to find a factual basis for e defendant s agreement to criminal forfeiture. See United States v. Ken Int l Co., Ltd., 11 F.d 1, 1 WL 11, at * ( Cir. 1).

9 nexus requirement of Rule.(b) having been satisfied, e proposed Preliminary Order should be entered. B. The Mechanics of e Criminal Forfeiture of e Mongols Registered Trademarks The Preliminary Order of Forfeiture becomes final as to e defendant at e time of sentencing (or before sentencing if, as here, defendant consents). Rule.(b)(). Following entry of e requested Preliminary Order, e second phase of e forfeiture proceedings may begin, to determine wheer any ird party rights may exist in e Mongols Registered Trademarks. Fed. R. Crim. P..(c)(1); 1 U.S.C. 1(l). Accordingly, e government respectfully requests at e Court enter e proposed Preliminary Order of Forfeiture lodged contemporaneously herewi, auorizing e government to seize e property subject to forfeiture (to e extent it has not already done so) and to commence proceedings governing ird-party rights. Fed. R. Crim. P..(b)(). The government will publish notice generally and give direct notice of e Preliminary Order to e sole known potential ird-party claimant, Mongols Nation Motorcycle Club, Inc. Following such notification and completion of any necessary ancillary proceedings, e government will submit, as appropriate, a final order of forfeiture pursuant to Fed. R. Crim. P..(c). C. There Is No Need To Delay e Entry of e Requested Preliminary Order of Forfeiture The fact at e criminal case is still ongoing is no reason to delay e forfeiture proceedings concerning e Mongols Registered Trademarks. For e reasons explained above, e bases for forfeiture of e marks have been established. Furer

10 proceedings concerning e guilt of e remaining defendants will have no effect on e forfeitability of e marks. Defendant was e original registrant and owner of e marks until October 1, 00, eier as e National President of Mongols Nation (an unincorporated association), or as e owner/manager of Shotgun Productions, LLC. See exhibits A rough F to e Welk Declaration. These facts establish at e marks were acquired and maintained by defendant as part of e RICO enterprise. Moreover, defendant s admissions establish at e marks were property or rights at afforded a source of influence over e RICO enterprise, establishing a separate basis for forfeiture. The marks were temporarily assigned back to Mongol Nation (an unincorporated association) in October 00, at which time Hector Gonzalez, anoer defendant in is case, was e National President. See exhibits B, D and F to e Welk Decl. However, Mongol Nation (rough Gonzalez) subsequently transferred e marks in January 00 (in direct violation of is Court s restraining order of October, 00) to a newly-formed corporation called Mongols Nation Motorcycle Club, Inc. ( Mongols, Inc. ), which is e current owner of e marks. See exhibits B, F and H to e Welk Decl. The President of Mongols, Inc., Martin Guevara, is e current National President of e Even in e unlikely event at some of e remaining RICO defendants are acquitted, e nexus between e marks and e RICO enterprise which has already been proven by e pleas taken to date cannot be undone, and none of e individual defendants have any ownership rights in e marks in any event.

11 Mongols (see exhibit H to Welk Decl.), and no oer ird party appears to have standing to contest e forfeiture of e marks. If Gonzalez had retained control over e marks in his capacity of National President of Mongol Nation (e unincorporated association), it is possible at his status as a defendant in is case might have interfered wi his ability to defend against e forfeiture of e marks in an ancillary proceeding on behalf of e unincorporated association. However, since Gonzalez, as National President of Mongol Nation (an unincorporated association) opted to assign ose rights in eir entirety to a non-defendant ird party, neier he nor e unincorporated association he represented at e time of e transfer has any ownership or oer rights in e marks. In oer words, according to e clear chain of title at e Mongols emselves established, e only person wi e right to claim an interest in e marks in e ancillary proceeding is Mongols, Inc. The entry of e proposed Preliminary Order of Forfeiture will give Mongols, Inc. e opportunity to present its arguments as to why e marks should not be forfeited, someing 1 The contemptuous act of transferring and assigning e registered marks to Mongols, Inc. in e face of is Court s order prohibiting it arguably makes e transfer/assignment voidable by e Court, but e government is unlikely to request such a remedy since e transfer (1) deprives e unincorporated association of standing to make an ancillary claim, since it voluntarily assigned its entire interest in e marks to Mongols, Inc., and is erefore estopped from making an ownership claim in e ancillary proceeding; and () almost certainly makes it impossible as a matter of law for Mongols, Inc. to prevail in an ancillary proceeding on an innocent owner claim.

12 it is statutorily prohibited from doing prior to e entry of such an order. Finally, as e Court knows very well, e government s efforts to forfeit e Mongols Registered Trademarks have been e target of two separate collateral attacks so far (one of em by Mongols, Inc.). Moving forward wi e forfeiture proceedings wi respect to e marks will prevent future collateral attacks and allow e forfeiture proceedings wi respect to e marks to be concluded. III. FORFEITURE MUST BE PRONOUNCED AT SENTENCING At sentencing, pursuant to Rule.(b)() of e Federal Rules of Criminal Procedure, e "order of forfeiture becomes final as to e defendant and shall be made a part of e sentence and included in e judgment." The Court must pronounce e forfeiture conditions orally as part of e sentence imposed on e defendant, and must include e forfeiture in e judgment and commitment order. See United States v. Gaviria, 11 F.d 1, 10 (D.C. Cir. 1) (forfeiture portion of e defendant s sentence must be announced 0 in his presence pursuant to Fed. R. Crim. P. (a)). The 1 government recommends e following language be read to e See 1 U.S.C. 1(i): Except as provided in subsection (l) [governing irdparty ancillary claims], no party claiming an interest in property subject to forfeiture under is section may - (1) intervene in a trial or appeal of a criminal case involving e forfeiture of such property under is section....

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