Trust Fun

United States v. Zaleski, No. 11-660-cr (2d Cir. July 13, 2012) (Newman, Lohier, Droney, CJJ)

This fascinating opinion considers whether the defendant, Alan Zaleski, from whom a large quantity of  legally possessed firearms and ammunition were seized, should be permitted get them back from the government and sell them through a third party trustee, even though as a convicted felon, he is no longer permitted to possess them himself, even constructively.  While the district court denied his motion for a return of the property under Fed.R.Cr.P 41(g), the circuit remanded to give Zaleski a second bite at the apple.

The Facts

Among the weapons seized from Zaleski’s home were several illegal items.  He ultimately pled guilty to possessing (1) machine guns (2) a gun with an obliterated serial number and (3) a variety of unregistered devices. Until then, he was not a felon. 

The remaining items seized, which he estimated to be worth $100,000, were lawfully possessed at the time, although Zaleski cannot have them back, since he is now a prohibited person. The litigation over the seized materials began when the government moved under the All Writs Act, 28 U.S.C. § 1651(a) – at last we know what that section is for! – for an order authorizing it to retain and detroy this material.  Zaleski countered with his Rule 41(g) motion seeking an order permitting their transfer to a federally licensed gun dealer in trust, who would sell the materials on Zaleski’s behalf, after taking twenty per cent off the top.

The district court denied both motions. It held that the government did not need an order authorizing it to destroy the seized items and that Zaleski’s arrangement with the third-party dealer would violate § 922(g)(1) because Zaleski was now a felon.

The Circuit’s View

On appeal, the circuit agreed with Zaleski’s argument that there was a way he could manage his proposal without violating § 922(g)(1). The district court had held that the transfer of the materials to the trustee on Zaleski’s behalf would violate § 922(g)(1) because Zaleski would still be in constructive possession of them. Other circuits have split on whether a third-party’s possession in trust of firearms on behalf of a convicted felon constitutes constructive possession. The Second Circuit went with the Seventh Circuit, which has held that “a convicted felony may devise an arrangement in which he recovers the value of the seized firearms without contravening Section 922(g)(1).”

It is possible to structure such an arrangement in a way that the felon will not have constructive possession – “the power and intention to exercise dominion and control over an object” – of materials sold by a trustee for his benefit. A trustee may exercise “exclusive control” over the disposition of the trust, and thus, “[s]ole possession and exclusive control of the firearms by a thirty party may extinguish the felon’s possessory interest.”  Thus, the district court on remand will have to carefully examine Zaleki’s arrangement with the dealer to see if it will constitute prohibited constructive possession.

And the possibility that Zaleski might benefit financially does not by itself mean that he constructively possesses the materials, as long as the proposed transfer to the trustee would “in fact strip Zaleski of any power to exercise dominion and control” over them and the dealer is a “suitable custodian” who is “not subject to Zaleski’s control.”  The district court may implement “appropriate safeguards,” such as a deadline for the sale, establishing accounting procedures, and instructing the dealer that he may not return the items to Zaleski or honor his instructions concerning them.