781 F. Supp. 2d 115
E.D.N.Y2011Background
- Indictment charges Dupree, Foley, and Watts with conspiracy to commit bank, mail and wire fraud, bank fraud, and false statements.
- Dupree served as president/CEO of GDC; Foley was outside counsel and COO; Watts was CFO/CIO of GDC.
- GDC and its subsidiaries allegedly misrepresented loan collateral and accounts receivable to Amalgamated Bank to obtain up to $21 million in credit.
- Fraud proceeds allegedly flowed through multiple accounts (Amalgamated and Chase), with funds moved among subject accounts; CS-1 and Patello provided supporting testimony.
- Magistrate Judges Go and Reyes issued seizure warrants to restrain funds in specified accounts; Amalgamated later released some funds and Chase accounts remained restrained; Amalgamated obtained a state-court restraining order and funds were redirected.
- Court denied defendants’ motions to vacate seizure, suppress evidence, and dismiss the Indictment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pretrial seizure of funds was authorized | Dupree and Watts lack standing; government met probable cause | Seizure lacked probable cause and constitutional basis | Pretrial seizure authorized; standing established |
| Whether seizure procedures violated 21 U.S.C. 853/e and related statutes | Procedures sufficient; less restrictive measures not required | Procedures improper; less restrictive options existed | Seizure procedures proper; no failure of process |
| Whether evidence seizure and search violated Fourth Amendment | Warrants supported by probable cause; proper execution | Warrants overbroad or executed improperly | Warrants valid; no suppression warranted |
| Whether Franks or Monsanto hearings are required | Franks/Monsanto rights trigger hearings for misrepresentations or need-based funds | Factual misrepresentations and need require hearings | Franks and Monsanto hearings denied; no basis shown |
| Whether indictment should be dismissed for prosecutorial misconduct | Pattern of misconduct; rights violations | Misconduct compromised fairness | Indictment not dismissed; no outrageous misconduct proven |
Key Cases Cited
- United States v. Gates, 462 U.S. 213 (U.S. 1983) (probable cause review and deference to magistrate findings)
- United States v. Razmilovic, 419 F.3d 134 (2d Cir. 2005) (pretrial seizure and forfeiture context under §2461 prior to indictment)
- United States v. De Almeida, 459 F.3d 377 (2d Cir. 2006) (interpretation of 2461(c) and §853 procedures; pretrial seizure authority)
- Monsanto v. United States, 491 U.S. 600 (U.S. 1989) (pretrial forfeiture and attorney-fee considerations; Monsanto framework)
- United States v. Jones, 129 F.3d 718 (2d Cir. 1997) (post-indictment grand jury use and related standards)