796 F.3d 226
2d Cir.2015Background
- William R. Cosme was arrested (Dec. 2012) on wire-fraud charges alleging misappropriation of about $5.5 million; agents seized vehicles, $634,894 in currency, and froze several bank and investment accounts.
- The government froze the accounts by letters referencing civil-forfeiture authority and claiming exigent circumstances, and later sought only criminal forfeiture in the indictment (which included forfeiture notice language).
- The government never obtained a seizure warrant; it obtained a district-court pretrial restraining order (Aug. 6, 2013) permitting the government to maintain custody of the seized property through conclusion of the criminal case.
- Cosme executed two stipulations in exchange for release of some funds for counsel, expressly waiving his right to a Monsanto hearing and not to seek further post-restraint Monsanto relief; he reserved Fourth and Fifth Amendment challenges.
- The district court denied Cosme’s motion to vacate the August 6, 2013 order, concluding the indictment provided sufficient probable-cause showing and that Cosme had waived Monsanto relief; Cosme appealed.
Issues
| Issue | Plaintiff's Argument (Cosme) | Defendant's Argument (Gov.) | Held |
|---|---|---|---|
| Whether a judicial finding of probable cause was required to continue restraint of assets | No judicial probable-cause finding occurred; Fourth Amendment requires a judge to determine probable cause when defendant protests | Indictment’s forfeiture language and grand-jury process suffice to show probable cause (citing Kaley) | Court: No. Grand jury did not vote on forfeiture allegations; district court must make its own probable-cause determination and remand for that finding |
| Whether exigent-circumstances justified warrantless, multi-year freezing of bank accounts | Warrantless, prolonged seizure of fungible bank accounts violated Fourth Amendment; exigency does not justify indefinite restraint | Daccarett permits exigent freezing of electronic/fungible assets; initial freeze was justified and ongoing possession is permissible | Court: Exigent-circumstances exception only permits seizure while reasonably necessary to obtain a warrant; continued multi-year seizure without a warrant violated the Fourth Amendment |
| Whether Cosme waived his Fourth and Fifth Amendment challenges by not objecting and by stipulations | Stipulations and failure to object at the Aug. 6 conference did not waive Fourth- and Fifth-Amendment claims | Government contends Cosme waived appellate challenges by conference conduct and stipulations | Court: Cosme did not waive Fourth- and Fifth-Amendment claims; stipulations only waived Monsanto (Sixth-Amendment) relief |
| Whether Cosme is entitled to immediate return of seized property due to unconstitutional seizure | Seeks return as remedy for unconstitutional, warrantless seizure | Government: Even if seizure was illegal, property may still be forfeited if probable cause supports forfeitability | Court: Immediate return denied unless district court finds lack of probable cause on remand; illegal seizure does not automatically preclude forfeiture |
Key Cases Cited
- United States v. Daccarett, 6 F.3d 37 (2d Cir. 1993) (exigent circumstances can justify temporary warrantless freezing of fungible electronic accounts)
- Kaley v. United States, 134 S. Ct. 1090 (U.S. 2014) (court may not second-guess grand jury probable-cause determinations; but applies only when grand jury actually voted on the matter)
- United States v. Monsanto, 924 F.2d 1186 (2d Cir. 1991) (requires adversary pretrial Monsanto hearing when Sixth-Amendment right to counsel is implicated)
- United States v. Bonventre, 720 F.3d 126 (2d Cir. 2013) (defines threshold showing for Monsanto relief—insufficient unrestrained assets to fund counsel of choice)
- United States v. Lasanta, 978 F.2d 1300 (2d Cir. 1992) (forfeiture statute does not itself create a new exception to the Fourth Amendment warrant requirement)
- Mincey v. Arizona, 437 U.S. 385 (U.S. 1978) (warrantless searches must be strictly circumscribed by their exigencies)
- United States v. Premises & Real Prop. at 4492 S. Livonia Rd., Livonia, N.Y., 889 F.2d 1258 (2d Cir. 1989) (due-process notice and opportunity to be heard in property deprivation contexts)
- Olano v. United States, 507 U.S. 725 (U.S. 1993) (waiver requires intentional relinquishment of a known right)
- United States v. Candelaria-Silva, 166 F.3d 19 (1st Cir. 1999) (civil forfeiture can be converted to criminal forfeiture after indictment)
- United States v. $37,780 in U.S. Currency, 920 F.2d 159 (2d Cir. 1990) (court may permit use of subsequently obtained evidence to justify forfeiture)