SHAWN PEREZ
2740 Camino Capistrano
San Clemente, CA  92672
Telephone: (949) 492-9545
Facsimile: (949) 492-9538

H. DEAN STEWARD, HI Bar No. 4026
107 Avenida Miramar, Suite C
San Clemente, CA  92672
Telephone: (949) 481-4900
Facsimile: (949) 496-6753

EARLE A. PARTINGTON   1568
1330 Pacific Tower
1001 Bishop Street
Honolulu, HI  96813
Telephone: (808) 526-9500
Facsimile: (808) 533-4588

Attorneys for Defendant SCHULZE

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAII

UNITED STATES OF AMERICA,

			Plaintiff,

		vs.

MICHAEL SCHULZE (1),

			Defendant.

))))))))))

CR. NO. 02-00090 (DAE)

MOTION FOR RETURN OF SEIZED PROPERTY PURSUANT TO FEDERAL RULES OF CRIMINAL PROCEDURE, RULE 41e

Sentencing Date: 
		September 2, 2003
Time: 	1:00 p.m.

	COMES NOW defendant Michael Schulze, together with counsel, and moves this honorable court for the return of the following seized assets:

	1.	One 1995 GMC Suburban, C 1500 SLT, blue in color, VIN: 1GKFK16K4SJ700382, Nevada license number 971KJD.

	2.	Fujitsu Notebook Computer, serial number JP830245564

	3.	Sony Notebook Computer, model PCG-F490, serial number 283065303107372

	4. 	$23,000.00 in United States Currency, seized from the residence of Michael Schulze, located at 3224 Ludlow Avenue, Las Vegas, NV.

	This motion is based upon this Notice, the attached memorandum points and authorities, and upon such oral and/or documentary evidence as may be adduced at the time of the hearing before the Court.
Dated: August 15, 2003          
	
						_____________________
				 		SHAWN R. PEREZ
						Counsel for Defendant
						Michael Schulze

MEMORANDUM OF POINTS AND AUTHORITIES

	Factual Summary

	Defendant Michael Schulze was convicted after trial by jury of multiple violations of 21 USC §§ 841(a)(1) and 846, on February 11, 2003. Thereafter, a Special Verdict was issued in which the jury ordered him to forfeit the following:

	Item 1-		The fee simple interest in the real property located at 2121 Geronimo Way, Las Vegas, Nevada

	Item 3-		One 2000 Four Winns Cabin Cruiser Boat, Vista 248, white and blue in color

	Item 4-		One 1994 Four Winns Cabin Cruiser Boat, Single Axle, green in color
 
	Item 5-		One Bob Cat Front End Loader located at 2121 Geronimo Way, Las Vegas, Nevada
 
	Item 6-		One 1997 Yamaha Jet Ski, Model GP760, Wave Runner, yellow in color

	Item 7-		One 1992 Mercedes Benz, 500SL, convertible, black in color
 
	Item 8-		One 1994 Chevrolet, C5000, Dually Pick-Up Truck, white in color
 
	Item 9-		One blue 1995 Chevrolet Impala

	Item 11-	One 1995 GMC Suburban, C2500 SLT, tan in color

	Item 12-	One 2000 Nissan Frontier, Crew Cab Pick-Up Truck, grey in color

	Item 13-	One Ladies Platinum Solitaire ring containing one heart-shaped brilliant cut diamond weighing 1.04 carats

	Item 14-	$180,000 representing the proceeds from
the sale of one parcel of land, being further described as Parcel #125- 29-304-007, in Clark County, Nevada.

	The Government moved to withdraw Item numbers 2 and 10 from the jury’s consideration. 
	Item 2 is “A sum of money equal to $1,000,000 in U.S. funds or currency, representing the amount of proceeds obtained as a result of the offense(s) listed in Count 1.  Item 10 is One 1995 GMC Suburban, C 1500 SLT, blue in color, VIN: 1GKFK16K4SJ700382, Nevada license number 971KJD.
	On or about August 15, 2003, the government served counsel for the Defendant with a preliminary order of forfeiture that is to be filed with the Court prior to the Defendant’s sentencing scheduled for September 2, 2003.  The preliminary order makes no mention of the property that is the subject of this motion.
	This motion seeks the return of the vehicle that was described in Item 10, as well as $23,000.00 in currency (part of Item 2) and 2 notebook computers as previously described.
ARGUMENT
1.		The Court Has a Duty to Return Contested Property Once the Government’s Need for it Has Ended.
	When a motion for return of property is made before an indictment is filed (but a criminal investigation is pending), the movant bears the burden of proving both that the seizure was illegal and that he or she is entitled to lawful possession of the property. 3 C. Wright, Federal Practice & Procedure, Criminal 2d § 673 at 753-54; Watts v. Kroczynski, 636 F. Supp. 792, 796 (W.D. La. 1986); United States v. $20,294.00, 495 F. Supp. 147, 150 (E.D.N.Y. 1980).
	However, when the property in question is no longer needed for evidentiary purposes, either because trial is complete or the defendant has pleaded guilty, the burden of proof changes. The person from whom the property is seized is presumed to have a right to its return, and the government has the burden of demonstrating that it has a legitimate reason to retain the property. United States v. Wright,610 F.2d 930, 939-940, 197 U.S. App. D.C. 411 (1979); Ferris v. United States, 511 F. Supp. 795, 796 (D. Nev. 1981).  
	In such a case, the legality of the search and seizure is no longer an issue; even if the seizure was lawful the government must justify its continued possession of the property by demonstrating that it is contraband or subject to forfeiture. Sovereign News Co. v. United States, 690 F.2d 569, 577 (6th Cir. 1982), cert. denied, 464 U.S. 814, 78 L. Ed. 2d 83, 104 S. Ct. 69 (1983); United States v. Smith, 659 F.2d 97, 99 (8th Cir. 1981); United States v. Farrell, 196 U.S. App. D.C. 434, 606 F.2d 1341, 1347 (D.C. Cir. 1979); United States v. Premises Known as 608 Taylor Ave., 584 F.2d 1297, 1302 (3d Cir. 1978); but see United States v. Sweeney, 688 F.2d 1131, 1146 (7th Cir. 1982) (Rule 41 motion unavailable even after trial if seizure lawful). 

	A district court has both the jurisdiction and the duty to return the contested property once the government's need for it has ended. See, cf., United States v. Martinson, 809 F.2d 1364 United States v.  $20,294.00, 495 F. Supp. 147, 151 (E.D.N.Y. 1980).
	In the instant case the trial is over.  In the case of both the vehicle (Item 10) and the currency (Item 2), the government withdrew those items and elected not to pursue the forfeiture.  The computers were never part of the indictment.  Unless the government can otherwise justify the forfeiture then those items must be returned.

2. 		The Assets That Were Part of the Indictment Can Not be Substitute Assets.
	"[C]riminal forfeiture orders are something of a mongrel." United States v. Hurley, 63 F.3d 1, 23 (1st Cir. 1995), cert. denied, 517 U.S. 1105 (1996). First, the initial forfeiture is sought in the indictment and, absent a waiver of jury trial, is specified in the jury verdict. Id. (citing Fed. R. Crim. P. 7(c)(2) and 31(e); 18 U.S.C. § 1963(m)). Then, if the forfeited assets are unavailable, an order substituting assets may be made by the court. Id.; 21 U.S.C. § 853(p).
	An asset cannot logically be both forfeitable and a substitute asset. To allow such an anomaly would render the substitute assets provision meaningless. Assets involved in or traceable to the offense are forfeitable once the requisite nexus is established. See, e.g., 18 U.S.C. § 982(a). 
	The substitute assets provision allows the forfeiture of other assets not already forfeitable when the forfeitable asset is unavailable due to some act or omission of the defendant. See 21 U.S.C. § 853(p); United States v. Ripinsky, 20 F.3d 359, 365 n.8 (9th Cir. 1994) (" § 982 . . . defines forfeitable assets to be only those associated with the underlying offense or traceable to the offense and distinguishes between 'forfeitable' and   'substitute' assets.")^1. 

^1 The provisions set forth in 21 U.S.C. § 853 are substantially identical to the criminal forfeiture provisions in 18 USC § 982.

	Here, it is anticipated that the government will seek (at least) the forfeiture of the $23,000.00 as a substitute asset, despite its possession of the currency since the date of the Defendant’s arrest.  Because the government seized the asset prior to the criminal forfeiture, it cannot now be considered a substitute asset.  21 USC § 853 does not permit the pretrial restraint of substitute assets. Ripinsky, 20 F.3d 359, 360.  The court reasoned that “substitute assets [are] not subject to pretrial restraint because they [are] “untainted;” they [are] not  proceeds of criminal activity ... [R]estraining assets not even alleged to be the fruits of criminal activity would be overreaching. United States v. Infelise, 159 F.3d 300, 305 (7^th Cir. 1998), (describing the ruling in Ripinsky; See also, United States v. Gotti, 155 F.3d 144 (2^nd Cir. 1998)
	Thus, an order of forfeiture of the $23,000.00 based on the substitute assets provision would not be logical or proper.
CONCLUSION
	Based on the foregoing, Defendant Michael Schulze respectfully requests that the Court grant his motion and order the return of the 1995 GMC Suburban, C 1500 SLT; the Fujitsu Notebook Computer, serial number JP830245564; the Sony Notebook Computer, model PCG-F490, serial number 283065303107372; and the $23,000.00 in United States Currency.
Dated: August 15, 2003       Respectfully submitted,     
	
						_____________________
				 			SHAWN R. PEREZ
							Counsel for Defendant
							Michael Schulze

CERTIFICATE OF SERVICE

	I hereby certify that a true and exact copy of the foregoing MOTION FOR THE RETURN OF SEIZED PROPERTY was duly served on the following parties by U.S. Mail, Facsimile or hand-delivery on August 21, 2003.
					U.S. Mail		Fax/Hand-Delivery

KENNETH M. SORENSON		X					X
Assistant United States Attorney
PJKK Federal Building, Room 6100
300 Ala Moana Blvd.
Honolulu, HI  96813

DATED: August 21, 2003
Las Vegas, Nevada

                             SHAWN R. PEREZ, ESQ.