In February 2006, Avedis Djeredjian was indicted in the above captioned criminal case. Being a resident of Southern California, he retained Michael Mayock - a California criminal defense attorney - so that he could more easily cooperate in the preparation of his defense. Djeredjian has not been able to pay Mr. Mayock's retainer, and Claimants' financial resources are stretched so thinly that they are struggling to borrow money needed to pay the expenses, such as the hefty travel expenses.

On October 25, 2006, a superceding indictment was handed down, naming Djeredjian's wife Carmen Badrian as a defendant. Due to their financial predicament, Claimants have not been able to retain counsel for Ms. Badrian. In the event this motion is granted and seized assets are released to pay counsel fees, Ms. Badrian intends to hire attorney Brenda Grantland (also a California lawyer) as her criminal defense counsel. Ms. Grantland has been representing Claimants in their forfeiture case since the onset of litigation - as well as in this litigation seeking the release of assets to pay attorneys fees - and knows the facts and procedural history of the case.

Since the commencement of these proceedings, claimants have exhausted their finances. Their bank accounts are depleted. They have sold several items of personal property, and gave two vehicles to claimants' brother-in- law to secure a loan which they obtained from him to pay their federal income taxes. See Declaration of Carmen Badrian in Support of Her Motion for Release of Her Vehicle for Substantial Hardship and supporting documentation. Claimants also sold the only stock they owned.

Claimants owe their attorneys a substantial amount of money, and the pending criminal litigation promises to be costly. They owe Michael Mayock $80,000 for his retainer in the criminal case, and owe local counsel Joe Zeszotarski $8,305. As of the filing of the motion they owed Brenda Grantland $22,178.75 for her work on the criminal case, including the motion for release of assets. This amount is substantially larger now, and she will require an additional minimum retainer before entering an appearance as Carmen Badrian's counsel in the criminal case. (Although they also owe her money on the civil forfeiture case, case law does not permit the release of assets to pay fees for civil forfeiture litigation.)

The cost of lodging and travel to New Bern for hearings and trial will cost thousands of dollars. Several defense witnesses, as well as defendants and their counsel, are all located in California.

For the above reasons, Djeredjian's and Badrian's only option for financing their criminal defense with counsel of their choice is to obtain release of some of the seized assets.

As Claimants will show at the evidentiary hearing, several of the seized assets are clearly "untainted" since they were purchased before the allegations in the indictment and forfeiture complaint, and there are no allegations they were used to facilitate an offense.

The real estate located at 1633 Greenbriar Road was purchased outright in 2000. This property is held in trust, with Djeredjian's mother, Ashkhen Djeredjian being the beneficial owner of a life estate, and Djeredjian being the beneficial owner of the remainder interest. If this asset is released the beneficiaries and trustee agree to allow the asset to be used as collateral for a loan.

The parcel at 1356 Doverwood Drive was purchased in 1999, with a down payment of $140,534.61. Although the Doverwood property was financed, by the time of the earliest allegations in the complaint (January 2002) claimants had been making payments for 2 years and 4 months - totaling $91,086.24 in mortgage payments (approximately $41,000 towards the principal). Additionally, the property gained equity through appreciation during this period.

The Modern Cigarettes bank account had a balance of $14,933.18 when it was frozen in April 2003 in connection with Vicken Djeredjian's case, and has had no activity since that date. Except for one cash deposit of $27, all of the deposits since January 1, 2002 were rebate checks from tobacco company manufacturers.

The Alan Nazarian Discount Outlet bank account (which had a balance of $120,014.96 when it was frozen in April 2004 in relation to Vicken Djeredjian's superceding indictment) was comprised solely of deposits of tobacco manufacturers' rebate checks and customer checks or money orders from the retail business.

Claimants will document these and other facts at the evidentiary hearing.

The government's Supplemental Memorandum makes several factual claims which Claimants dispute. On page 5, the government alleges that "[b]etween January 2002 and April 2005, Djeredjian purchased approximately 495,412 cartons of cigarettes at a cost of $8,760,492." Claimants do not know how the government could have arrived at such a preposterous sum, but it is simply not true.

The government makes much of the fact that Djeredjian is employed at Modern Video of California City, which is owned by his brother, and that the government had seized a bank account in the name of Modern Video, that belongs to Avedis Djeredjian. Evidence will show that these were two different businesses, owned separately by the two brothers. Avedis' store was located in the city of Acton; it went out of business in 2005. Vicken's store in California City is still operating, with Avedis running it during his brother's incarceration.

1. ARGUMENT

Since Avedis Djeredjian and Carmen Badrian have made a substantial showing that some of the seized assets are legitimate and that release of assets is necessary to for them to pay defense attorney fees, they are entitled to a pretrial adversary hearing for the purpose of determining whether untainted assets have been seized and whether those assets should be released to pay attorneys fees. United States v. Farmer, 274 F.3d 800, 801 (4^th Cir. 2001). The same rule applies whether the assets were seized or restrained in a criminal forfeiture or civil forfeiture case. Farmer, 274 F.3d at 804; United States v. Michelle's Lounge, 39 F.3d 684, 693 (7^th Cir. 1994); United States v. Jones, 160 F.3d 641 (10^th Cir. 1998). Here, the assets are restrained in both criminal and civil forfeiture cases.

Defendants have already made a threshold showing that "a portion of the assets restrained... are untainted" and that they have "no other funds from which to secure counsel of his choice." Farmer, 274 F.3d at 803. At the evidentiary hearing they bear the burden of proving by a preponderance of the evidence "that the government seized untainted assets without probable cause and that [they need] those same assets to hire counsel." Farmer, 274 F.3d at 806. The counsel fees at issue are the fees for retaining counsel in the criminal case - not the civil forfeiture case, Farmer, 274 F.3d at 805 - although civil forfeiture counsel is entitled to compensation from the released assets for the cost of successfully litigating the release of assets issue. United States v. Michelle's Lounge, 126 F.3d 1006, 1008-09 (7^th Cir. 1997).

The government argues that because Carmen Badrian's vehicle has been released to her pending trial, she cannot seek its release to pay attorneys fees. Although it was released, the conditions of its release prevent claimants from borrowing money against it - if there is any equity in it to borrow against. Thus the government's argument in its Supplemental Memorandum, p. 9 - that the BMW has already been released - is disingenuous. However, claimants have not listed that vehicle among the assets they are seeking to have released because it has little or no equity in it.

The government argues at pages 9-10, that the two parcels of real property at issue were not "seized" - but that a lis pendens was filed instead. The cases distinguishing between "seizure" of real estate and the filing of a notice of lis pendens are concerned with whether the due process notice and hearing requirements of United States v. James Daniel Good Real Property, 510 U.S. 43 (1993) are triggered. A seizure of real estate triggers the Good hearing requirement, but a lis pendens does not. That is irrelevant to the motion for release of assets. In Good the Supreme Court made it clear that a lis pendens interferes with the property owner's ability to refinance the property. "Sale of the property can be prevented by filing a notice of lis pendens as authorized by state law when the forfeiture proceedings commence." 510 U.S. at 58.

The government argues at page 10 that a court has made an ex parte finding of probable cause to seize these assets, based on the hearsay statements of Agent Fanelly's affidavit. That is no obstacle here, because under Farmer and the prior ruling of Chief Judge Flanagan, Claimants are entitled to an evidentiary hearing in which they are allowed to present evidence. If the government has proof of any of the matters it alleges it is certainly free to put it on at the hearing.

When seized or restrained property such as real estate was derived in part from legitimate, non-contraband sources, the court may modify the restraint to release the untainted portion so that defendant can obtain a lien against that amount to pay counsel fees. United States v. Najjar, 57 F.Supp.2d 205, 209-10 (D.Md. 1999).

Although the Fourth Circuit has held that substitute assets may be restrained pretrial⁽¹⁾ - a position rejected by every other federal circuit⁽²⁾ - "a careful analysis of Billman indicates... that the court should not restrain [a defendant's] untainted interest in [property]" on a substitute assets theory where there is no evidence that the defendant has placed assets beyond the jurisdiction of the court, particularly where the assets are needed for attorneys fees. Najjar, 57 F.Supp.2d at 209.

Wherefore, for the above reasons and any other reasons as may be shown at the hearing on this motion, the untainted portions of the foregoing assets should be released to pay counsel fees.

Respectfully submitted,

BRENDA GRANTLAND, ESQ.

Attorney for Claimants

California State Bar No. 165899

20 Sunnyside Suite A-204

Mill Valley, CA 94941

415-380-9108

Fax 415-381-6105

W. Michael Mayock

Attorney for Avedis Djeredjian

California State Bar No. 54074

35 South Raymond Ave., Suite 400

Pasadena, CA 91105

(626) 405-1465

(626) 405-0158

mayocklaw@sbcglobal.net

_______________________

Joseph Zeszotarski, Esq.

Local counsel

Poyner & Spruill

P.O. Box 10096

Raleigh, NC 27605

919-783-1005

fax 919-783-1075

State Bar No. 21310

LR 83.1 Counsel

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing reply was served, by mail, upon Assistant United States Attorney Joshua Royster, 310 New Bern Avenue, Suite 800, Raleigh, NC 27601-1461, this ________ day of ___________________, 2006.

_________________________

Joseph Zeszotarsi, Esq.

1. In re Billman, 915 F.2d 916, 921 (4^th Cir. 1990).

2. See Najjar, 57 F.Supp.2d at 209 n. 3 & n.4.