Thursday, August 30, 2007

Gov't Prematurely Filed Lis Pendens on Substitute Property and Prevented Defendant from Hiring Counsel

U.S. v. Jarvis,--- F.3d ----, 2007 WL 2421758 (10th Cir. August 28, 2007)

A nice defense victory. In a multi-D multi-count CCE drug and conspiracy case, a superceding indictment also charged criminal forfeiture of certain identified properties and alleged a demand of over $150 million in judgment. The government filed a lis pendens (lp) under NM law on D’s Mora real property. The lp prevented D from liquidating his property to pay for private counsel. He appealed the district court’s denial of his challenge to the propriety of the lp under the collateral order doctrine.

D did not raise the precise theory below that he raised on appeal; the 10th held that this was one of those rare cases in which the issue was not forfeited because it was purely a question of law and proper resolution of the matter was certain, and so exercised discretion to address the issue.

There was no dispute in this case that D’s Mora properties were acquired before any alleged criminal activity, so it is “substitute” property, and the government would first need to obtain a conviction to claim any right to forfeit the property to satisfy a money judgment. All Cts of App. but one which has ruled on the issue have ruled that substitute property in 21 USC § 853(e) precludes pre-conviction restraint of substitute property. Under NM law, to be eligible to record a lp notice on a piece of real property, the party recording the notice must assert a present claim to the property's title or have some other present interest in the subject property. The United States did not have that interest and was not entitled to file a lp under NM law.