New York Federal Criminal Practice Blog
March 23, 2010

SDNY Judges Order Monsanto Hearing on Whether Frozen Assets Were Tainted

Defendants in parallel civil and criminal cases involving allegations of securities fraud won a significant victory earlier this month when two SDNY judges granted their motions to be permitted to pay for lawyers of their choice from untainted funds, and ordered a hearing under United States v. Monsanto, 924 F.2d 1186 (2d Cir. 1991), to determine if there was probable cause to believe the funds are tainted by fraud.  In Commodity Futures Trading Commission v. Walsh, 2010 WL 882875 (S.D.N.Y. March 9, 2010), SDNY Judges Daniels and Cedarbaum held that the fact that the defendants' funds and assets had been frozen in the parallel civil proceedings rather than the criminal case was of no matter:

[T]he present action involves asset freeze orders in civil actions, with Defendants also being tried in a parallel criminal proceeding. These unique circumstances require the court to pay particular attention to the Defendants' Fifth and Sixth Amendment rights. The Government has failed to cite any case law which stands for the proposition that a defendant is not entitled to use untainted funds, frozen in a civil action, in order to pay legal fees for his counsel of choice in a parallel criminal action.

Lawyers:  Glenn Colton and Mark Flessner (defendant Walsh); Frederick Hafetz and Tracy Sivitz (defendant Greenwood); AUSAs John O'Donnell and Marissa Mole

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