Second Circuit Court of Appeals Vacates District Court's Order Permitting Warrantless Seizure
In United States v. Cosme, the United States Court of Appeals for the Second Circuit vacated and reversed the District Court's denial of a motion to vacate a restraining order that had been placed on the defendant William Cosme ("Cosme"). Cosme was on trial for wire fraud in the Southern District of New York following his 2012 arrest. At the time of arrest, several assets, including cars and cash, were seized by the government. The government also had certain bank accounts frozen under civil forfeiture statutes, claiming that a warrant would be forthcoming. Instead of a warrant, however, the government included in Cosme's indictment a notice provision section that stated the assets would be forfeited. Importantly for the Second Circuit Court of Appeal's ultimate decision, these notice provisions were not subject to a vote of the grand jury.
Following the indictment, the government sought a restraining order to maintain the seized assets. The District Court heard from all parties on the application and ultimately Cosme entered into a restraining order with stipulations that the government would release certain seized cash to Cosme (in order to pay for his attorney of choice), in exchange for Cosme waiving his right to challenge the entirety of the restraining order (and other seized property). Once Cosme had a new attorney, he challenged the continued seizure of his assets on Fourth and Fifth Amendment grounds, which he argued had not been waived by his earlier stipulations. The Fifth Amendment ground for his challenge was dismissed by the Second Circuit because, while the Government's motion for the restraining order was ex parte, the order itself was issued with all parties involved, as the sides met and negotiated the stipulations to which Cosme agreed.
Cosme's Fourth Amendment claim, however, held water with the Second Circuit Court of Appeals. The Court noted that it had held previously that the government must establish probable cause if a seizure is protested, even if the government does not have to go before a judge beforehand. The government switching course from a civil forfeiture to criminal forfeiture, and then not having the grand jury vote on the forfeiture, did not insulate the government from having to provide probable cause to restrain the Defendant's assets as required by the Fourth Amendment. The Court held that the "exigent circumstances" exception to this probable cause requirement only allows for the seizure "for as long as reasonably necessary to secure a warrant," which the government never ended up doing in this case. The Second Circuit reversed on Cosme's Fourth Amendment challenges that the government failed to seek a warrant prior to seizure and failed to obtain a judicial finding as to whether probable cause supports the forfeitability of the seized assets. The case has been remanded to the District Court for the Southern District of New York for a determination on these issues.
To read a copy of the Second Circuit's decision, click here.
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