The opinion of the court was delivered by: J. Leon Holmes United States District Judge
Eyad and Linda Hassan, along with four persons related to them, have been indicted for structuring financial transactions to evade reporting requirements and for conspiring to do so. The government has filed a motion for protective order to preserve a convenience store owned by defendants Eyad and Linda Hassan and for a writ of entry. The Hassans object to the government's motion. The Hassans also move for the release of cash previously seized by the government from the Hassans' home and the home of two co-defendants. For the following reasons, the government's motion is denied, and the Hassans' motion is granted in part and denied in part.
The FBI has investigated Eyad and Linda Hassan and four members of their extended family -- Fuad Hasan, Hanan Hasan, Sahar Alabed Kattom, and Amjad Mutie Kattom -- on suspicion of conspiring to transfer large amounts of money outside of the United States in such a manner as to evade reporting the transactions as required by federal law. An affidavit of an FBI agent who participated in the investigation describes the activities and the circumstances of the alleged scheme. This affidavit was submitted in support of the government's motion. According to the affidavit, a person who purchases from a financial institution an official check in the amount of $3,000 or more must submit identification to assist the bank with filing a Monetary Currency Transaction Report ("MCTR"). The affidavit states that all six of the defendants purchased numerous official checks from various banks in amounts just below $3,000. The affidavit describes one transaction in which Linda Hassan entered a Regions Bank with a paper sack containing a post-it note and cash in the amount of $2,971. The post-it note said "To: Rana Naji," "From: Aisha Ahmad," "$2965.00." After charging Linda Hassan $6.00 for the official check, the bank teller made the check for $2,965.00 payable to Rana Naji and showed the remitter as Aisha Ahmad. The FBI agent asserts that all of the checks purchased by Linda Hassan have been negotiated overseas. The affidavit further states that, according to a report filed by Regions Bank with the FBI, "Linda Hassan also has a pattern of depositing cash in amounts just below the MCTR $10,000 threshold." These cash deposits went into an account for the Markham Food Mart, which is owned by Eyad and Linda Hassan.
The affidavit also states, "Linda and Iyad [sic] Hassan and Fuad and Hanan Hasan are living and conducting financial transactions at levels that are not commensurate with their reported income." Specifically, both couples have monthly automobile and mortgage payments that apparently exceed their ability to pay based upon their reported incomes on their income tax returns.
In November 2005, the FBI executed search warrants and seized $101,054 from Eyad and Linda Hassan's home and $2,460 from Fuad and Hanan Hasan's home. About four months later, all six targets of the FBI's investigation were indicted on charge of structuring financial transactions to evade reporting requirements in violation of 31 U.S.C. §§ 5324 and 5325 and conspiracy to structure financial transactions to evade reporting requirements in violation of 18 U.S.C. § 371.*fn1
The government now seeks a pretrial protective order and a writ of entry regarding a convenience store, the University One Stop at 7300 South University, Little Rock, Arkansas, owned by Eyad and Linda Hassan. The government contends that this convenience store is subject to forfeiture due to the Hassans' alleged violations of 31 U.S.C. §§ 5324 and 5325 and 18 U.S.C. § 371. The government asks that the Hassans be restrained from alienating the property or impairing its value. The government also contends that the cash seized is subject to forfeiture and is therefore subject to pretrial restraint. The Hassans argue that neither the convenience store nor the cash can be forfeited even if they are convicted, so those assets are not subject to pretrial restraint. The Hassans argue that the government in fact seeks pretrial restraint of substitute assets, which the government denies. The Hassans oppose the government's motion for protective order and have moved for the release of the cash that was seized on November 25, 2005.
The Court held a hearing on June 23, 2006, regarding these motions. After hearing arguments and taking evidence on the matter, including the testimony of Linda Hassan, the Court asked the parties to submit additional briefs. The parties have done so. The government also has moved for this Court to reopen the hearing to receive evidence that Eyad Hassan did not pay taxes on the money that was seized from his home. The Hassans oppose the motion to reopen the hearing on the grounds that the government has closed its proof and the defendants are not charged with a tax offense. Whether Eyad Hassan paid taxes on the seized currency is not relevant to the issues presently before the Court. Accordingly, the government's motion to reopen the hearing is denied.
As noted above, the Hassans are charged with structuring financial transactions in violation of 31 U.S.C. § 5324 and with conspiracy to commit this crime. The applicable criminal forfeiture statute, 31 U.S.C. § 5317(c)(1), provides in pertinent part:
The court in imposing sentence for any violation of section . . . 5324 of this title, or any conspiracy to commit such violation, shall order the defendant to forfeit all property, real or personal, involved in the offense and any property traceable thereto. . . . Forfeitures under this paragraph shall be governed by the procedures established in [21 U.S.C. § 853].
Section 853 provides for pretrial restraint of property that would be subject to forfeiture in the event of conviction. After an indictment has been filed, "the court may enter a restraining order or injunction . . . or take any other action to preserve the availability of property described in subsection (a) of this section for forfeiture . . . ." 21 U.S.C. § 853(e)(1). Subsection (a), in turn, provides that property subject to forfeiture includes "property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of" the criminal offense and "property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation . . . ." 21 U.S.C. § 853(a). In other words, a defendant's property is subject to pretrial restraint under § 853(e) only if the property was obtained as a result of the crime or used to facilitate commission of the crime. Cf. United States v. Field, 62 F.3d 246, 248-49 (8th Cir. 1995).
We bear in mind that "[p]reconviction restraints are extreme measures." United States v. Riley, 78 F.3d 367, 370 (8th Cir. 1996). See also United States v. Razmilovic, 419 F.3d 134, 137 (2d Cir. 2005) (noting that the Supreme Court has dubbed pretrial restraint as a "'nuclear weapon' of the law"); United States v. Ripinsky, 20 F.3d 359, 363 n.5 (9th Cir. 1994) ("Given the partly punitive nature of § 853, we must be cautious about construing § 853 liberally.").
The Hassans contend that the only property involved in the alleged money structuring offenses was the money sent overseas. Because that money is now unavailable to the government, the Hassans argue, the government is trying to seize their cash and their convenience store as "substitute assets," i.e., assets of equivalent value taken in place of property used in the commission of a crime. While substitute assets are subject to forfeiture upon ...