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United States v. Cannistraro

argued: January 25, 1989.

UNITED STATES OF AMERICA
v.
CANNISTRARO, RICHARD, APPELLANT



Appeal from the United States District Court for the District of New Jersey, D.C., Crim. No. 87-00193-01.

Stapleton, Mansmann and Garth, Circuit Judges.

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

In this securities fraud case we are presented with a novel issue: whether Local Rule 35C.l of the District Court of New Jersey, which - in the event of a conviction and imposition of fines - acts as a lien on any cash deposited for bail until the government can levy a writ of execution on the money, violates the eighth amendment as excessive bail. In addition, the defendant challenges the amount of restitution he must pay, the length of his sentence as being disproportionate to those of others convicted of the same or similar crimes, and the district court's sentencing procedure pursuant to Fed. R. Crim. P. 32(c). We affirm the district court's denial of the return of bail monies but vacate the sentence and remand to the district court for a determination of whether the lengths of sentence of other defendants for similar crimes may have been improperly considered.

I.

On May 28, 1987 a federal grand jury issued a 9 count indictment charging Cannistraro with conspiracy to defraud the United States in violation of 18 U.S.C. § 371 (Count 1); creating false nominee accounts in violation of 15 U.S.C. § 78j(b) and 18 U.S.C. § 2 (Counts 2 - 5); distributing false newsletters (Count 6); illegal transportation of stolen money in violation of 18 U.S.C. §§ 2314 and 2 (Count 7); mail fraud in violation of 18 U.S.C. §§ 1341 and 2 (Count 8); and with obstruction of justice, 18 U.S.C. § 1503 (Count 9).

Cannistraro was arrested in California and released after posting $75,000 in cash and a $50,000 bond. He returned to New Jersey where he entered a guilty plea to all nine counts on September 21, 1987. At the conclusion of a detention hearing on September 24, 1987, he was permitted to remain free on bail pending sentence. The bail was increased by $450,000. Cannistraro then posted $575,000 in bail consisting of municipal bonds and certificates of deposit. On November 2, 1987, Cannistraro was sentenced to a total of eight years in prison with five years probation, and was ordered to pay fines of $330,000 and restitution in the amount of $394,847 to a trustee appointed by the Securities and Exchange Commission.*fn1

Cannistraro's counsel then requested that the district court cancel the bail recognizance. The Clerk's Office of the District of New Jersey informed counsel that pursuant to Local Rule 35C.l of the General Rules of the District of New Jersey, the $75,000 cash posted could not be returned but was, in essence, "frozen" as a lien in favor of the government pending payment of the $330,000 fine.

Subsequently, on November 20, 1987, the SEC petitioned the district court for an order freezing Cannistraro's assets which were posted for bail until a trustee could be appointed. On December 1, 1987, the district court signed the order providing that the assets would remain in the court's control until the appointment of a trustee. Counsel was furnished with a copy of the order on December 9, 1987.

In late February of 1988, the government requested that the court issue a writ of execution directing the United States Marshal in the District of New Jersey to satisfy the judgment against Cannistraro out of his personal property. The Marshal's office served the writ on the Clerk of Court in Trenton, effecting execution upon the monies and assets submitted to secure Cannistraro's appearance bonds.

The SEC approved the appointment of a trustee to manage Cannistraro's restitution fund. The district court signed the SEC's order on March 22, 1988.

Cannistraro moved for return of the assets and cash he posted for bail and also filed a motion to reduce or correct the sentence pursuant to Fed. R. Crim. P. 35. The government moved to direct the Clerk of Court to turn over all assets to the U.S. Marshal and for assets equal to $394,847 to be paid to the trustee of the restitution fund. The district court granted the government's motion for a turn-over order, denied Cannistraro's motion for the return of bail money and denied the Rule 35 motion. Cannistraro appeals.

Our review of matters alleging a violation of the eighth amendment is plenary since it involves a question of law. The review of a district court's denial of a Rule 35 motion is subject to an abuse of discretion standard. United States v. Bickoff, 531 F.2d 182 (3d Cir. 1976).

II.

Local Rule 35C.l of the District of New Jersey ...


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