Case 1:11-cv-01109-RB-LFG Document 63

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IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF NEW MEXICO UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) Case No: 11 CV 1109 RB-LFG ) Real Property Located at 6600 and 6560 SE, ) Deming, NM and 6545 El Portal Road SE, ) Deming, NM, Including all Structures, ) Appurtenance and Improvements Thereon, ) Containing 85 Acres More or Less, Owned by ) RICK REESE and TERRI REESE, ET AL., ) ) Defendants. ) ______________________________________________________________________________ DEFENDANTS MOTION FOR PARTIAL RELEASE OF ASSETS ______________________________________________________________________________

COMES NOW the Defendants, Rick Reese and Terri Reese, by and through their counsel of record, Robert J. Gorence of Gorence & Oliveros, P.C., and Jason Bowles of the Bowles Law Firm, and hereby move this Court to enter an order authorizing the release of a portion of their seized assets to pay for upcoming legal expenses as well as to provide life subsistence. As grounds for this motion, Defendants state as follows: 1. On August 24, 2011, the Defendants were charged in a 30 count grand jury

indictment. Count 1 charged Defendants with conspiracy under 18 U.S.C. 924(a)(1)(A) and 554. Counts 2 through 10 charged Defendants with False Statements in Connection with the Acquisition of Firearms under 18 U.S.C. 924(a)(1)(A) and 2. Counts 11 through 28 charged Defendants with Smuggling Goods from the United States under 18 U.S.C. 924(a)(1)(A) and 2. Counts 29 and 30 charged Defendants with violations of federal money laundering statutes.

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2.

As part of the Indictment, the government included forfeiture allegations and filed

a separate civil forfeiture case, United States of America v. Real Property Located at 6600 and 6560 SE, Deming, NM, et al, No. 11-cv-1109 RB, on December 19, 2011. The civil forfeiture action involved the following property: a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) o) q) 3. Real Property located at 6600 and 6560 Ventura Road SE, Deming, NM; Real Property located at 6545 El Portal Road SE, Deming NM; 1,428 Firearms; 1,975,262 rounds of assorted ammunition; 535 canisters of smokeless power; 4,757 ammunition magazines; $117,823.09 in gold and silver coins; 2008 Chevrolet Suburban; 2006 Jeep Rubicon; 2005 Chevrolet Suburban; 2005 Dodge Ram; Assorted Body Armor; 17 gun safes; $11,019.92 in funds seized from First Savings Bank; $5,449 in U.S. currency seized from Terri Reese; $13,000 in U.S. currency seized from the Reese Residence; $4,000 in U.S. currency seized from an outbuilding on the Reese property; and $84,000 in U.S. currency seized from the Reese store. At the conclusion of evidence in the criminal case and prior to the jurys verdict

on August 1, 2012, the parties agreed that the civil forfeiture would proceed in January based on the trial record created during the criminal trial. 4. Following the entry of this Courts order on February 1, 2013, granting Rick

Reese and Ryin Reeses Motion for New Trial, there is obviously no longer a trial record from the original case. As such, the Reeses are asking that the civil forfeiture action be stayed until the conclusion of the criminal proceedings. 5. This matter is now on appeal to the Tenth Circuit Court of Appeals. Because the

proceedings before the Tenth Circuit will be time-consuming, and assuming that this Courts order is affirmed, there is still the matter of sharing testimony on the Motion to Dismiss pending

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before the court and potentially a new trial. Obviously, significant legal expenses will be incurred. Additionally, the Reeses require money for subsistence which will be established at an evidentiary hearing in this matter. Mr. Reese will testify regarding his lack of any financial resources to support himself and his family since all of their money and assets were seized by the government and are subject to the forfeiture in this matter. See, Exhibit A (Affidavit of Rick Reese). 6. As such, the Reeses request the release of their assets pursuant to United States v. Jones, 160 F.3d 645-49 (10th Cir. 1998). Proceedings surrounding the motion for return of property seized in a criminal case are civil in nature. United States v. Maez, 915 F.2d 1466, 1468 (10th 1990), and based on equitable principles, see United States v. Madden, 95 F.3d 38, 40 (10th 1996). The Civil Asset Forfeiture Reform Act, 18 U.S.C. 983, governs all requests for the pretrial release of property that has been seized for civil forfeiture. United States v. Approximately up to $15,034,6633 in Funds Contained in Ten Bank Accounts, 844 F. Supp. 2d 1216 (D. Utah 2011). A claimant may be entitled to immediate release of seized property if five specific criteria are satisfied: (A) (B) (C) the claimant has a possessory interest in the property; the claimant has sufficient ties to the community to provide assurance that the property will be available at the time of the trial; the continued possession by the Government pending the final disposition of forfeiture proceedings will cause substantial hardship to the claimant, such as preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless; the claimant's likely hardship from the continued possession by the Government of the seized property outweighs the risk that the property will be destroyed, damaged, lost, concealed, or transferred if it is returned to the claimant during the pendency of the proceeding; and none of the conditions set forth in paragraph (8) applies.

(D)

(E)

18 U.S.C. 983(f)(1). Paragraph 8 denies relief where the property:

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(A)

(B) (C) (D)

is contraband, currency, or other monetary instrument, or electronic funds unless such currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business which has been seized; is to be used as evidence of a violation of the law; by reason of design or other characteristic, is particularly suited for use in illegal activities; or is likely to be used to commit additional criminal acts if returned to the claimant.

Id. 983(f)(8). The burden is on the claimant to demonstrate that all five criteria set forth in 18 U.S.C. 983(f)(1) are present. United States v. Approximately up to $15,034,6633 in Funds Contained in Ten Bank Accounts, 844 F. Supp. 2d 1216 (D. Utah 2011) (citing 18 U.S.C. 983(f)(6)). If a claimant fails to establish any one of the five criteria, its motion for the release of property must be denied. United States v. Approximately up to $15,034,6633 in Funds Contained in Ten Bank Accounts, 844 F. Supp. 2d 1216 (D. Utah 2011) (citing Undetermined Amount of U.S. Currency, 376 F.3d at 265). In order for a claimant to successfully argue for the return of currency or electronic funds, 18 U.S.C. 983(f)(8)(A) must be examined. It does not appear that the Tenth Circuit has looked at this exception in depth, but in examining the meaning of this exception, a district court aptly stated that a legitimate business is singular, assets is plural, and has been seized is singular; therefore, has been seized grammatically must refer to a legitimate business, not assets. United States v. Approximately up to $15,034,6633 in Funds Contained in Ten Bank Accounts, 844 F. Supp. 2d 1216, 1217-18 (D. Utah 2011) (quoting United States v. Contents of Account No. 4000393243 at *1, 2010 WL 3398142 (Jan. 2, 2010, S.D.Ohio 2010)). Other courts that have addressed this statute have similarly determined that a legitimate business must be seized, not merely the assets of a legitimate business. See, e.g., In re Seizure Warrants Issued March 27, 2008, 593 F.Supp.2d 892 (N.D.W.Va.2008) (rejecting claimant's argument that the exception

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applied to the assets which have been seized from a legitimate business and determining that the phrase which has been seized modifies legitimate business, not assets); Kaloti Wholesale, Inc. v. U.S., 525 F.Supp.2d 1067, 1070 n. 2 (E.D.Wis.2007) (exception in 983(f)(8)(A) does not apply where the Government did not seize the business but merely a portion of its inventory.); United States of America v. 8 Gilcrease Lane, 587 F.Supp.2d 133, 140 (D.D.C.2008) (concluding that even though 100% of liquid assets were seized, there was insufficient evidence that the Government had seized the business for purposes of 18 U.S.C. 983(f)(8)). Monetary assets may also be released in order for a Defendant to pay legal expenses and fees. Due process requires a pretrial adversary hearing when a Defendant claims that a portion of the assets restrained pursuant to criminal forfeiture statues are untainted and that he has no other funds from which to secure the counsel of his choice. United States v. Jones, 160 F.3d 64549 (10th Cir. 1998). The Jones Court noted that a Defendant must demonstrate to the Court's satisfaction that [he or] she has no assets other than those restrained with which to retain private counsel. 160 F.3d at 647. The Defendant must also make a prima facie showing of a bona fide reason to believe that the grand jury erred concerning whether the assets are traceable to illegal activity. 160 F.3d at 647. Courts have also required a post restraint hearing to protect a criminal defendant's Sixth Amendment right to counsel in cases where the defendant asserts that he needs access to the restrained funds in order to pay defense counsel. See United States v. E-Gold, Ltd., 521 F.3d 411, 421 (D.C. Cir. 2008) (we hold that where the government has obtained a seizure warrant depriving defendants of assets pending a trial upon the merits, the constitutional right to due process of law entitles defendants to an opportunity to be heard at least where access to the assets is necessary for an effective exercise of the Sixth Amendment right to counsel).

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7.

The Reeses were found not guilty on 29 of the 30 charges. As such, many of

the assets seized were part of the Reeses legitimate business and should no longer be seized. Further, the continued possession by the government will cause substantial hardship to the Reeses and will prevent them from operating their business. The funds must also be released because the Reeses are in the middle of a lengthy legal battle which will include a new trial on the remaining charges. Significant legal fees will be incurred and the Reeses will need access to the restrained funds in order to pay for the inevitable legal expenses. Thus, a portion of the seized assets should be released. WHEREFORE, for all of the above reasons, and for such reasons as may appear upon a full evidentiary hearing of this matter, Defendants request that this Motion be granted. Respectfully submitted, /s/ Robert J. Gorence Robert J. Gorence Gorence & Oliveros, P.C. Attorney for Defendant 1305 Tijeras Avenue NW Albuquerque, NM 87102 (505) 244-0214 gorence@gopcfirm.com

/s/ Jason Bowles Jason Bowles Bowles Law Firm 201 3rd Street NW, Suite 1370 Albuquerque, NM 87102 (505) 217-2680 jason@bowles-lawfirm.com

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been emailed by CM/ECF to counsel entitled to notice, this 13th day of May, 2013.

/s/ Robert J. Gorence Robert J. Gorence

EXHIBIT A