In re: 650 Fifth Avenue and Related Properties

Background

The court addressed letters from the Alavi Foundation of New York ("Alavi"), the 650 Fifth Avenue Company (the "Partnership"), and the Government about a future hearing under 18 U.S.C. § 985(d)(1)(B)(i). The hearing would concern whether the Government had probable cause to seize rental income generated by the operation of the building at 650 Fifth Avenue. Both sides agreed that a hearing would take place; the dispute concerned the hearing’s scope.

The Government had originally sought to proceed under § 985(d)(1)(B)(ii), which permits an ex parte determination of probable cause and exigent circumstances before seizure without prior notice and an opportunity to be heard. After the court converted the application to a motion on notice, and with the parties’ consent, the court proceeded under § 985(d)(1)(B)(i), which requires a meaningful opportunity for the property owner to be heard before the court rules on the Government’s application.

Parties’ Positions

The Claimants requested an evidentiary hearing at which they could challenge the Government’s evidence, present their own evidence, call witnesses, cross-examine Government witnesses, and present affirmative defenses. They also sought discovery on issues including their statute-of-limitations defense.

The Government argued that a trial-like hearing was unnecessary because the parties had already submitted extensive briefing, documentary evidence, and testimony excerpts. It did not object to supplemental affidavits from affirmative witnesses but opposed live testimony and cross-examination. The Government also argued that many subjects the Claimants wanted to explore were collateral to the narrower probable-cause question.

Court’s Analysis

The court treated the scope of a “meaningful opportunity to be heard” as both a statutory and constitutional question. Applying the three-factor due-process framework from Mathews v. Eldridge prospectively, it considered the private interest affected, the risk of erroneous deprivation and value of additional procedures, and the Government’s interest and the burdens of additional procedures.

First, the court concluded that the private interest did not strongly favor the extensive hearing requested. The dispute involved commercial property, particularly rental income, rather than a residence. Although the Claimants’ commercial interests were not insubstantial, the court stated that they traditionally did not receive the same special constitutional protection as a home.

Second, the court concluded that the risk of error and the value of additional procedures did not strongly favor a more extensive proceeding. The purpose of the hearing was limited to deciding whether probable cause existed to believe the assets were forfeitable. The court found that the requested cross-examination concerned subjects such as alleged anti-Muslim bias, business dealings with Alavi, financial interests in the forfeiture action, exposure to allegedly unconstitutional searches, and the statute-of-limitations defense. The court described these issues as largely unrelated or collateral to the Government’s probable-cause showing.

The court nevertheless recognized that testimony concerning the Claimants’ innocent-owner defense could be relevant to probable cause. It allowed the Claimants to submit supplemental affidavits from Hassan Hassani and Ali Dabiran, former Alavi board members, and allowed the Government to respond. After reviewing those materials, the court would decide whether live testimony from either witness was necessary.

Third, the court concluded that the Government’s interest and the administrative burden weighed against the full evidentiary hearing requested. It reasoned that turning the preliminary probable-cause proceeding into a trial-like process could require the Government to effectively litigate two proceedings and could undermine efficient enforcement of the forfeiture laws.

Order

The court ordered that the hearing begin at 10:30 a.m. on October 5, 2020, with an additional date on October 6, 2020, if necessary. The Government could rely on the evidence and arguments submitted with its pending motion for a restraining order concerning the rental income. The Claimants could rely on the evidence and arguments submitted with their opposition.

The Claimants could submit supplemental affidavits from Hassani and Dabiran by August 28, 2020. The Government could respond by September 4, 2020. The court would then determine whether live testimony from those witnesses would be permitted. The Government was not required to produce additional discovery concerning the Claimants’ defenses before the hearing.

Disposition and Classification

This was a procedural order governing the scope of a pre-seizure probable-cause hearing and related discovery. The court did not decide whether probable cause ultimately existed to seize or forfeit the rental income.