September 22, 2009
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
MICHAEL CETTA, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Complaint No. W2007-371388-1493.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 2, 2009
Before Judges Parker and Yannotti.
Defendant Michael Cetta was granted leave to appeal from an order entered on March 6, 2009 denying his application for a stay of an order returning his leased Jaguar to the leaseholder, Jaguar Credit, pending appeal. The Jaguar was the subject of a forfeiture action by the State pursuant to N.J.S.A. 2C:41-3b. Upon his emergent application, filed April 13, 2009, we granted leave to appeal and a stay pending disposition of the appeal. We now affirm the March 6, 2009 order and dissolve the stay.
The background for this appeal is as follows. Defendant was arrested on December 18, 2007 and charged in a criminal complaint with third degree promoting gambling; first degree money laundering; first degree racketeering; second degree conspiracy to distribute heroin; and second degree bribery. Since his arrest and the filing of the complaint in December 2007, he has not been indicted. Nevertheless, the State proceeded with a forfeiture action and seized defendant's leased Jaguar. Jaguar Credit is currently in possession of the vehicle and was scheduled to auction it off when the emergent application was made.
In granting defendant's emergent application, we ordered that in addition to developing his argument that the Jaguar should be returned to him because he could demonstrate that it was leased with legitimate funds, both parties should brief the question of whether the forfeiture should proceed at all in view of the fact that defendant has not yet been indicted.
Pursuant to our order, defendant argues:
THE PROPERTY SEIZED IS NOT SUBJECT TO FORFEITURE UNDER THE RACKETEERING STATUTE
THE DEFENDANT/APPELLANT MICHAEL CETTA HAS BEEN SUBJECTED TO AN UNREASONABLE DELAY BY THE STATE IN PRESENTING THE CHARGES TO A GRAND JURY, THEREFORE, HIS PROPERTY SHOULD BE RETURNED
PREJUDICE TO THE DEFENDANT/APPELLANT
DEFENDANT/APPELLANT DOES NOT OWN THE LEASE[D] VEHICLE AND HAS NO EQUITY INTEREST IN SAME[,] THEREFORE, [THE] STATE [IS] NOT ENTITLED TO SEIZE [IT]
In his first point, defendant maintains that under State v. Sparano, 249 N.J. Super. 411 (App. Div. 1991), the State must demonstrate that "but for" his alleged racketeering, defendant would not have acquired the property the State seeks to forfeit. Defendant maintains that much of his property was purchased prior to the alleged pattern of racketeering and that he and his wife earn a substantial income from their hair salon.
The State responds that the Jaguar is subject to forfeiture "because it was acquired or maintained, directly or indirectly, through violating the racketeering statute." The State contends that under Sparano, substitute assets may be forfeited pursuant to the racketeering statute. Consequently, the State maintains that it is entitled to seize the Jaguar, based solely upon the allegations in the complaint and the 195-page Affidavit in Support of Application for Arrest Warrants and for Restraint-Seizure of Property (Affidavit).
In Sparano, the defendant pled guilty to drug charges, racketeering and income tax evasion. Id. at 414. In negotiating the plea agreement, the parties could not agree on the amount of forfeiture pursuant to the racketeering charge and consented to submit the forfeiture issue to a jury. Ibid. "The jury returned a special verdict . . . finding that defendant had 'an interest, directly or indirectly,' in the marital residence . . . , a condominium unit . . . , and $298,917 in currency." Id. at 415. The jury determined that the defendant had an interest in each of these items resulting "from proceeds, monies or cash obtained or realized directly or indirectly as a result of [his] admitted violation of the New Jersey racketeering law," and that 100% of these items should be forfeited. Ibid.
During the trial in Sparano, "[t]he State endeavored to prove that defendant's expenditures during the period covered by the indictment far exceeded his known legitimate sources of income, while defendant contended that he and his wife . . . had generated considerable (although not necessarily reported) cash income from legitimate business ventures." Id. at 416. In reviewing the record, we found that "there was more than sufficient evidence presented . . . to permit the finding that defendant's income far exceeded his earnings from legitimate sources." Id. at 416-17.
In Sparano, we noted that N.J.S.A. 2C:41-3b applies to persons convicted of racketeering under N.J.S.A. 2C:41-2 and that "[t]he forfeiture is . . . part of the sentence imposed on a defendant after he or she has been found or pled guilty." Id. at 423-24 (citing United States v. Horak, 833 F.2d 1235, 1246 (7th Cir. 1987); United States v. Ginsburg, 773 F.2d 798, 800-01 (7th Cir. 1985) (en banc), cert. denied, 475 U.S. 1011, 106 S.Ct. 1186, 89 L.Ed. 2d 102 (1986)).
Here, the State argues that the racketeering statute, N.J.S.A. 2C:41-1 to -6.2, applies to an individual who has been charged and maintains that the probable cause affidavit, leading to the criminal complaint and arrest warrant against defendant, is sufficient to support the forfeiture action under N.J.S.A. 2C:41-3. N.J.S.A. 2C:41-3 provides as follows:
a. Any person who violates any provision of N.J.S.A. 2C:41-2 in connection with a pattern of racketeering activity which involves a crime of violence, a crime of the first degree or the use of firearms shall be guilty of a crime of the first degree. All other violations of N.J.S.A. 2C:41-2 shall be crimes of the second degree.
b. In addition, such persons shall forfeit to the entity funding the prosecuting agency involved the following:
(1) Any interest including money or anything of value he has acquired or maintained in violation of this chapter and
(2) Any interest in, security of, claim against, or property or contractual right of any kind affording a source of influence over any enterprise which he has established, acquired, maintained, operated, controlled, conducted, or participated in the conduct of, in violation of this chapter.
c. In any action brought by the Attorney General under this section, the Superior Court shall have jurisdiction to enter such restraining orders or prohibitions, or to take such other actions, including, but not limited to, the acceptance of satisfactory performance bonds, in connection with any property or other interests subject to forfeiture under this section, as it shall deem proper.
d. Upon conviction of a person under this section, the court shall authorize the Attorney General to seize all property or other interest declared forfeited under this section, subject to the rights of innocent persons such as any prior lienholders or other valid lienholders, upon such other terms and conditions as the court shall deem proper. If a property right or other interest is not exercisable or transferable for value by the Attorney General, it shall expire, and shall not revert to the convicted person.
e. The Attorney General shall dispose of all such property as soon as commercially feasible, making due provision for the rights of innocent persons.
f. When an offense charged may result in a criminal forfeiture, the indictment shall allege the extent of the interest or property subject to forfeiture. If the indictment alleges that an interest or property is subject to criminal forfeiture, a special verdict shall be returned as to the extent of the interest or property subject to forfeiture, if any.
While the statute clearly applies to persons convicted of racketeering offenses, the State maintains that paragraph c allows for restraints on property pending disposition. The State acknowledges that there is no New Jersey case law interpreting this section and relies on United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed. 2d 512 (1989), which addressed pre-disposition restraints on assets under the federal forfeiture statute, 21 U.S.C.A. § 853.
In Monsanto, the Supreme Court addressed the question of whether there was an exemption under the forfeiture statute for assets the defendant intended to use to retain an attorney, in the context of a pre-trial restraining order, as well as after the defendant was convicted of the racketeering charges. Procedurally, the matter came before the Court when the defendant was indicted for violation of the federal racketeering laws. Id. at 602, S.Ct. at 2659-60, 105 L.Ed. 2d at 518.
The indictment also alleged that three specific assets -- a home, an apartment, and $35,000 in cash -- had been accumulated by respondent as a result of his narcotics trafficking. These assets, the indictment alleged, were subject to forfeiture under the Comprehensive Forfeiture Act of 1984 (CFA) . . . 21 U.S.C.A. §853(a) . . . because they were "property constituting, or derived from . . . proceeds . . . obtained" from drug-law violations. [Id. at 602-03, 109 S.Ct. at 2660, 105 L.Ed. 2d at 518-19.]
"On the same day that the indictment was unsealed, the District Court granted the Government's ex parte motion, pursuant to §853(e)(1)(A), for a restraining order freezing the above-mentioned assets pending trial." Id. at 603-04, 109 S.Ct. at 2660, 105 L.Ed. 2d at 519. When the defendant moved to vacate the restraining order to permit him to use the assets to retain an attorney, the District Court denied the application and the defendant appealed. The Second Circuit remanded the matter for a hearing to determine whether the government had sufficient evidence to demonstrate the likelihood that the assets were forfeitable if the defendant were convicted. Id. at 605, 109 S.Ct. at 2661, 105 L.Ed. 2d at 520. At the end of the remand hearing, "the District Court ruled that it would continue the restraining order because the Government had 'overwhelmingly established a likelihood' that the property in question would be forfeited at the end of trial." Ibid. The Second Circuit subsequently modified the District Court's restraining order to permit the defendant to use the assets to pay attorney's fees. Id. at 606, 109 S.Ct. at 2661, 105 L.Ed. 2d at 520-21. The Supreme Court reversed on the ground that "there is no exemption from §853's forfeiture or pretrial restraining order provisions for assets which a defendant wishes to use to retain an attorney." Id. at 614, 109 S.Ct. at 2665, 105 L.Ed. 2d at 525.
The State argues here that the Supreme Court's analysis in Monsanto applies to this case because the provisions of 21 U.S.C.A. §853 are similar to N.J.S.A. 2C:41-3. Moreover, the legislative histories of both statutes are similar in that both Congress and the New Jersey Legislature intended that assets obtained through racketeering should not be exempt from forfeiture absent proofs that the assets were obtained with legitimately-earned funds.
We note that Monsanto is distinguished from the present case in several critical respects: the defendant there had already been indicted and the indictment included allegations against the assets frozen prior to trial. The State argued before the trial court, as it does here, however, that the 195-page Affidavit is sufficient to satisfy the requirements of N.J.S.A. 2C:41-3. We are constrained to agree.
The Affidavit identifies substantial properties owned by Michael Cetta and his wife, Vita Cetta, including the Jaguar, against which the State was filing lis pendens and applications for restraints and seizure. The Affidavit includes the facts upon which the State premises probable cause for the racketeering charges against defendant and twenty-three other individuals.
At the motion hearing on September 26, 2008, defendant attempted to introduce his tax returns to demonstrate that the Jaguar, among other assets, was obtained through legitimately-earned funds. The trial court was not satisfied, however, that the tax returns adequately supported defendant's position. Moreover, at the January 21, 2009 hearing on defendant's application for a stay, the court stated that it had reviewed the Affidavit and that one of the intercepted communications indicated that "it's costing Mr. Cetta $50,000 a month just to maintain his three residences, the seven or eight cars, all of the cash that they found in the accounts and everything. The State is telling me, and they have in the past, that these are all proceeds from illicit gambling and other activities." Based upon the allegations in the Affidavit, the court denied defendant's application for a stay.
Both Monsanto and Sparano upheld seizure of assets pursuant to the respective federal and state forfeiture statutes when sufficient evidence had been presented to demonstrate that those assets were obtained with racketeering funds. We have reviewed the Affidavit, as did the trial court, and we are constrained to agree that the evidence supports a finding that if defendant is convicted, the State will likely prove that the Jaguar was obtained and maintained with illegitimate funds. Accordingly, we affirm the trial court's order of March 6, 2009.
With respect to defendant's speedy trial and undue prejudice arguments, we note that no motion has been made to the trial court respecting those issues. Accordingly, we decline to address the arguments on appeal. R. 2:6-2; Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
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