Ex parte attachments of assets may best be viewed as an exception to the 14th amendment to the U. S. Constitution. That amendment, in its procedural due process clause, secures the citizens of the United States in their property, which ordinarily cannot be seized by agents of the state without a hearing before a judge. The 14th amendment requires the state to ensure that no one is deprived of "life, liberty, or property" without a fair opportunity to affect the judgment or result.
The exception is necessary because those accused of crimes – when found guilty – are called upon to surrender their assets as a part of their punishment, and an ex parte attachment prevents accused persons from disposing of their assets through fraudulent transfers or, in the case of drug kingpins, mobsters and career criminals, by using assets to bribe witnesses or to flee prosecution. Justice requires that those found guilty of breaking laws pay the penalty the laws assign.
Precisely because the ex parte attachment of assets is constitutionally exceptional, it is hedged about with statutory regulations to prevent its abuse by unscrupulous prosecutors and lawyers who may use the device to reduce to penury accused persons who are not guilty of wrongdoing. Statutory laws regulating the use of ex parte attachments, as well as unambiguous Supreme Court decisions, do not leave us at the mercy of litigators in white hats.
In an exparte attachment of assets, a prosecutor such as Blumenthal presents a judge with an affidavit from an affiant or testifier who must have direct knowledge of the putative criminal activity.
To illustrate this point, we may suppose the following set of circumstances: A bank has been robbed, and prosecutors are collecting affidavits to make an arrest and support a case at trial against the robbery suspect. It would be reasonable, useful and proper to obtain affidavits from those who have direct knowledge of events; say, the teller who was robbed, or all three people in a cash line who witnessed the robbery. It would be pointless to gather information from a reporter who filed a story about the robbery three days after it occurred because 1) the reporter’s information is hearsay and therefore inadmissible at trial, and 2) the law requires prosecutors to submit affidavits from people who have direct knowledge of putative criminal activity.
Incredibly, the affiant in the Hoffman case was, in the analogy above, the reporter -- the assistant attorney general prosecuting the case, Matt Fitzsimmons. And on the basis of the affidavit he supplied, a judge permitted Blumenthal to attach assets without giving the property owner the opportunity to contest in a timely manner at a judicial hearing the assertions in the affidavit. By the time the Hoffman’s, victims of an unscrupulous prosecution, were permitted to answer charges in the fatally flawed affidavit, their property and assets had long been expropriated. In such circumstances, the accused often are not able to afford a lawyer to represent them; their business and credit have been destroyed, which makes unethical deal making with unethical attorneys general a cinch – for the attorney general.
<a href="http://donpesci.blogspot.com/2009/10/everything-you-were-afraid-to-ask-about_30.html">In the Hoffman case featured earlier on this blog</a>, a Superior Court judge affirmed that Blumenthal had presented a fatally defective affidavit to seize assets owned both by Mr. and Mrs. Hoffman.
The seizure of Mr. Hoffman’s assets was highly irregular because he was not connected to his wife’s business, the subject of the complaints, and Blumenthal also used information he had to destroy Mr. Hoffman’s credit with his bank, which fatally interrupted Mr. Hoffman’s business.
In this blog, a close examination of the New England Pellet (NEP) case shines a bright light upon Blumenthal’s disregard for the procedural safeguards that prevent prosecutors from trampling upon the constitutional rights of property owners.
Blumenthal’s methodology, in this case and others, is by its very nature anti-legal if not illegal. Both the Hoffman case and the NEP case pivot on fatally defective affidavits and slipshod investigations. The Hoffman case shows how Blumenthal used the unchecked powers of his office to deprive both Hoffmans of their property through the use of a fatally defective affidavit: The attorney general has sovereign immunity and cannot be corrected by suits against him when he abuses his immunized powers. Affidavits in the NEP case were also defective. But in addition, the investigation that supported the defective affidavit used to seize all the business equipment of the joint owners of NEP was so unprincipled and slipshod that even now, more than a year after Blumenthal launched his first bombshell press release on the case, the attorney general has refused, in the face of strong evidence, to entertain the probability that he prosecuted the wrong people.
The New England Pellet Case Press Release
Blumenthal’s methods are unvarying. First comes the eye-catching journalistically salacious press release.
In his press release on the New England Pellet Case (NEP), the time Blumenthal spent as an editor of the Harvard Crimson while at college is not put to waste. With a flourish any carnival barker may envy, Blumenthal unveils his December 2008 suit, “filed in coordination with Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr.,” involving the co-owners of New England Pellet, Stephen Zaczynski and Jason Tynan. And he helpfully provides busy journalists with a slug flattering to himself they may use in their dispatches:
“New England Pellet burned its consumers -- taking their money and promising pellets that it knew it could not provide," Blumenthal wrote. "Consumers are paying twice for New England Pellet's callous conduct -- first for the thousands of tons of undelivered wood pellets and now for alternative, more expensive, supplies.
"My office will fight for a court order blocking New England Pellet from further consumer harm, as well as civil penalties and restitution for consumers. New England Pellet literally left consumers out in the cold -- accepting repeated pre-payment with absolutely no assurances it could provide anything in return."
The rest of the press release crackles with righteous indignation:
“Beginning in early March and continuing at least until the second week of October, New England Pellet offered to sell wood pellets for use in wood pellet burning stoves to Connecticut consumers. In many cases, the company pre-sold wood pellets at a fixed price per ton to be delivered to consumers at a later date during the summer, fall and winter.
“Owners Zaczynski and Tynan never reached any agreement with suppliers to provide New England Pellet LLC with enough wood pellets to cover their pre-paid customers. Despite this, Zaczynski and Tynan continued throughout the summer and fall of this year to accept prepayments for thousands of tons of wood pellets they knew they could not deliver.”
“The Enfield company admitted that by May 2008 it needed between 10,000 and 15,000 tons of wood pellets -- but a wholesaler, New England Wood Pellet of New Hampshire, informed New England Pellet as of May 2008 that it may only be able to supply one half that amount, and by June 2008 the amount the wholesaler could supply dropped to one quarter of the defendants' outstanding delivery obligations.
“New England Wood Pellet further warned the Enfield company that it risked losing any pellet shipment because of alleged intimidating and condescending emails it had received from the Defendants.
“By August of this year, New England Pellet failed to deliver thousands of tons of wood pellets to hundreds of pre-paid consumers. Despite knowing that it could not fulfill existing -- and surely future -- pre-pay contracts New England Pellet continued to accept pre-payments from consumers as late as the second week of October.
“As a result of New England Pellet's conduct, many pre-pay consumers were forced to purchase wood pellets from other suppliers at a higher price.
“Blumenthal's lawsuit seeks an order prohibiting New England Pellet and its owners from operating -- or participating in the operation of -- a wood pellet business or any other business involving acceptance of deposits or prepayments for goods. The lawsuit also seeks civil penalties and restitution for consumers.”
The data provided by Blumenthal in his press release was aggregated by several newspapers both in Connecticut and Massachusetts. Blumenthal, good as his word, used an affidavit prepared by an investigator in his office, Patrick Ahlquist, to secure from a judge an ex parte seizure of assets, then expropriated all the business machinery of NEP, without which co-owners Zaczynski and Tynan could not satisfy the pre-orders of their customers, and by so doing quickly forced the company out of business – which doubtless produced for Blumenthal a host of dissatisfied customers whose complaints he could cite in future press releases and court documents to justify the ex parte seizure of assets.
An Alternative Reading Of The Data
The lawyer defending NEP, Jim Oliver – especially after information surrendered in a discovery process, as well as information gathered following a deposition of Blumenthal’s investigator, Ahlquist -- would put a different construction on the partial, misleading data supplied by Blumenthal in his press release.
Oliver claims in a third party complaint against New England Wood Pellet (NEWP) of New Hampshire, the wholesaler that supplied NEP with its product, that the wholesaler committed to a sum of between 5,000 and 7,500 tons of pellets, more than enough to meet the customer needs of NEP.
The wholesaler, NEP asserts in its complaint, cut its delivery of pellets to NEP, violating both the Uniform Commercial Code and its contract with NEP.
This all important datum is hidden in plain sight in Blumenthal’s press release: “New England Wood Pellet of New Hampshire, informed New England Pellet as of May 2008 that it may only be able to supply one half that amount, and by June 2008 the amount the wholesaler could supply dropped to one quarter of the defendants' outstanding delivery obligations.”
The press release does not indicate that pre-payment is usual in cases in which lower prices are locked in and shipment depends upon the contractual obligations of wholesalers to retailers. Reporters did not ask Blumenthal why “New England Wood Pellet of New Hampshire, informed New England Pellet as of May 2008 that it may only be able to supply one half” of its contractual obligation or why, in the next month, NEWP further defaulted on its obligations by reducing the pellet amount to NEP to one quarter of its contractual obligation.
The investigator in Blumenthal’s office who provided the attorney general with the factual content of the affidavit Blumenthal used to seize the assets of NEP might have answered these questions had he done a proper investigation. However, there was no need for a proper investigation: Blumenthal already had released his partial information to the press. There was no need for an investigation that might have identified the responsibilities and obligations of NEWP towards NEP and, derivatively, towards the customers whose plights were vividly described in his press release.
NEWP’s cutback created a shortage of pellets for NEP’s Connecticut customers. Under pressure from Blumenthal to provide pellets for their Connecticut customers, Oliver further asserts, the wholesaler made use of the shortage it had created to make demands upon NEP that the company surrender valuable, exclusive distribution contract rights NEP had secured in New York and New Jersey.
Mr. Zaczynski and Mr. Tynan had harrowed the ground, planted and nurtured the vines, brought in the harvest and pressed the grapes. But NEWP was determined to appropriate the vineyard and drink their wine.
Before Blumenthal’s suit, NEP, scrambling to make good on its obligations, had already refunded $140,000 to its customers and offered to put funds in escrow to insure that their customers received refunds. Despite these attempts to salvage their business, Blumenthal, making his usual rounds of the television stations, claimed NEP was not co-operating. Following his usual modus operandi, Blumenthal, having seized NEP’s business machinery by means of an ex parte judgment, quickly terminated all attempts by NEP to recover from the shortages imposed on the company by NEWP’s violation of its contracts with NEP.
The alternative and more plausible reading of the facts massaged by Blumenthal in his press release suggests that NEWP, the wholesaler, violated its own contract with NEP and used the shortage it had created in Connecticut to force NEP to surrender to it NEP’s exclusive and valuable New York accounts.
When NEP advised Blumenthal that NEWP, abrogating its contract, had shorted NEP because it had designs on sales NEP had developed in New York and New Jersey, Blumenthal said that it did not matter for the purpose of his suit against NEP.
Both Blumenthal’s press release and the affidavit used by his office to secure an ex parte seizure of NEP’s assets were grounded on information compiled by the attorney general’s investigator, Patrick Ahlquist. That investigation was slipshod, to put it mildly, resulting in an affidavit that was consequently defective. The charges made in the affidavit -- as well as the press release and its damaging charges -- were imported without examination into several media stories that cast luster on Blumenthal at the same time they utterly destroyed the reputations of the co-owners of NEP, Zaczynski and Tynan, one of whom, suffering from Blumenthal’s attentions, attempted suicide.
Months after Blumenthal’s press release hit the newspapers and television stations, months after Blumenthal had seized NEP’s business equipment through the use of yet another faulty affidavit, months after the attempted suicide of one of the co-partners in NEP, Mr. Zaczynski and Mr. Tynan finally were able, through their lawyer, to exercise their 14th amendment rights to a fair opportunity to answer charges made by Blumenthal in his press releases.
That opportunity came when Mr. Oliver deposed under oath the two investigators in Blumenthal’s office connected with the case, Patrick Ahlquist and Stephen Hennessey
In his deposition of Ahlquist, then no longer employed by Blumenthal, attorney Oliver had an opportunity to revisit the spurious claims made in the affidavit signed by Ahlquist and used by Blumenthal to seize the assets of NEP.
What the investigator did not know concerning promised shipments of pellets between NEP and its supplier NEWP, as well as the contractual obligations between the two, was explored in the deposition.
Presenting affidavit to Ahlquist, Oliver asked whether Ahlquist had investigated and certified that the claims made by the complainants were true. Beyond assuming that the charges made by the complainants were true, Ahlquist had not, for example, investigated whether any of the complainants had received charge backs on their orders, which could have been done by contacting credit agencies.
Q. And this is an affidavit that you signed?The affidavit was drafted by an assistant attorney general in Blumenthal’s office who had been dispatched by Blumenthal to represent Ahlquist in an official capacity during his deposition. Under sworn questioning, Ahlquist acknowledged: that he did not draw up the affidavit he signed; that he had read paragraph 15 of the affidavit, which said “"I have read the foregoing, and it is true and accurate to the best of my knowledge and belief”; that he understood the obligations of an oath; that the role he performed in assembling the affidavit drafted by an assistant attorney general consisted in providing the support information and investigative information contained in his incomplete files.
A. Yes, sir.
Q. Okay. And when you signed this affidavit, you knew that you were sworn to the truth of the facts and matters asserted herein?
A. Yes, sir…
Q. Okay. Let me ask you this, right off the bat: Who drafted this affidavit? Did you draft it?
A. No, sir.
Oliver then probed to explore whether Ahlquist understood the difference between “personal knowledge” of the underlying consumer transactions he failed to investigate and “hearsay knowledge” of the transactions
Q. What is your understanding of personal knowledge?
A. Knowledge that you obtain through your own senses.
Q. Okay. Such as visually seeing an event occur or hearing an event occur?
A. That would be your senses, yes, sir.
Q. Would you agree that you were not present to witness or hear any of the consumer transactions that took place, that are the subject of this civil enforcement action?
A. Yes, sir...
Q. Okay. Would you agree that you do not have personal knowledge, as you have used that definition of the term "personal knowledge," with respect to any of the consumer transactions that are the subject of this sovereign enforcement action?
Ahlquist’s answer is convoluted because he has not grasped the difference between personal knowledge and hearsay knowledge.
A. I don't have personal knowledge. I have, you know, firsthand contact with the consumers, to and from.Oliver then proceeded to question Ahlquist on the matter of fraudulent transfers. The allegation of a fraudulent transfer is the linchpin of Blumenthal’s action against NEP – the sole charge, as Oliver put it in his questioning, "upon which the State of Connecticut was allowed to seize the property of Mr. Zaczynski without a hearing."
Q. Right. We call that hearsay; correct?
A. I'm probably not in a position to --
Q. Well, you're a police officer; correct? You've testified in criminal matters?
A. I had direct communication with the consumers, as they related the story to me. Saying that's -- if I had direct
Q. That's hearsay knowledge, isn't it?...
Q: So the answer is you hadn't substantiated their claim with an investigation, and you simply assumed that what you were being given by them was true and accurate?
A. In most cases the office works on the strength of the consumer's written complaint.
Q. So the answer to my question is yes?
Q. Okay. Why don't you simply get affidavits from the complainants?
A. I don't think I can answer that question, sir. I follow the protocol of the office.
Q. Okay. So the protocol of the office is not to bother to get affidavits from the complainants, who presumably have firsthand knowledge of the consumer transaction? That's the protocol of the office?
The admissions made by Ahlquist in the following colloquy demonstrate that the linchpin does not hold.
Q. Okay. Do you have any formal training concerning the Uniform Fraudulent Transfer Act?It is to the credit of the deponents that when Oliver mentioned Mr. Zaczynski’s attempted suicide, a respectful silence permeated the room.
A. No, sir.
Q. Do you know what the Uniform Fraudulent Transfer Act is?
A. No, sir.
Q. Have you ever read the Uniform Fraudulent Transfer Act?
A. No, sir.
Q. Let's jump for a second to paragraphs -- well, before we jump there, let me ask you this: And if I asked you this before, I apologize. Do you know what a fraudulent transfer is?
A. A fraudulent transfer?
Q. Yes, sir. Are you familiar with that term of art?...
A. Fraudulent transfer would be taking an asset and moving it to someone else's ownership to avoid a legal responsibility, I would think. That would be -- that would be the best answer I could give you, sir.
Q. Okay. I'd like to direct your attention to paragraph 22 of the complaint -- I'm sorry – the affidavit.
A. Yes, sir.
Q. It reads as follows: "Based upon the circumstances of this case, including inter alia, the actions as set forth in this affidavit, there is reasonable likelihood that the defendant Zaczynski is about to fraudulently dispose, hide, or withhold, or has fraudulently disposed, hidden, or withheld property, money, or effects, which should be liable to the satisfaction of defendant’s debts. Did I read that correctly?
A. Yes, sir.
Q. Okay. Based upon the investigation that you conducted prior to your leaving -- strike that. Prior to your signing this affidavit, what property did you identify that Mr. Zaczynski had fraudulently disposed of, hidden, or withheld?
A. In the past tense, none.
Q. You didn't find any? You weren't aware of any at the time you signed this affidavit, that Mr. Zaczynski had fraudulently disposed of, hidden, or withheld property; correct?
A. (Examining document.) The only area I would point out is, in regards to hidden, would be the – I don’t know where the funds were to satisfy the consumers.
Q. Did you have access to the bank records of Mr. Zaczynski or NEP at the time you signed this affidavit, to know how much funds they had in the account?
A. No, sir.
Q. So you didn't know whether they did or didn't have the funds to satisfy the consumers?
A. I didn't know what their account balances were.
Q. Okay. So as of the date you signed this affidavit, you had no evidence whatsoever that Mr. Zaczynski had fraudulently disposed of, hidden, or withheld property to the satisfaction of the defendants' debts; correct?
Q. Okay. So that portion of paragraph 22 was simply inaccurate.
A. (Examining document.) I believe it's an "or" or one or the other. That's the way I interpret it, but --
Q. We're going to break it down. I'm breaking it down for you.
A. I understand, sir.
Q. Right now we're focusing on whether as of the date of this affidavit, which is December 30, 2008, whether as of that date you had any evidence that Mr. Zaczynski had fraudulently disposed of, hidden, or withheld property, money, or effects to the satisfaction of the defendants' debts. And I think you answered you didn't have any evidence to that effect; is that correct?
A. I believe you're correct.
Q. Okay. Let's move on to the other part of the "or" phrase. "Is about to fraudulently dispose, hide, or withhold property, money, or effects which should be liable to the satisfaction of debtors' [sic] debts." What property had you identified that Mr. Zaczynski was about to fraudulently dispose, hide, or withhold, to the satisfaction of debtors -- of defendants' debts?
A. I believe that at the time that this was prepared, that there were large-ticket purchases or improvements to his property that could be easily transferred and that there was a reasonable likelihood that they could be disposed of, hidden, or withheld.
Q. What evidence did you have that Mr. Zaczynski was about to transfer large assets? Not that he could, but was about to.
A. The information that I had at the time was that product was being diverted, possibly sold for cash. That consumers were not -- with auditors, were not being delivered. They were defaulting on deliveries. That the --
Q. How does that relate to --
A. -- business had closed and was not -- no -- posted "until further notice." That all led to the likelihood that a principal in the company was about to...
Q. About to what?
A. About to have the ability to move or lose assets or...
Q. Did you get a witness statement from even one witness that said Mr. Zaczynski was about to sell any of his assets?
A. I think we were operating on the reasonable likelihood that he was about to.
Q. I'm not asking about guesses or speculation. I'm asking about evidence. You're a former police officer. You know the difference between evidence and guesses and speculation. What evidence did you have in the form of a witness statement that Mr. Zaczynski was about to fraudulently dispose, hide, or withhold property, money, or effects to the satisfaction of defendants' debts? What evidence did you have for that?
A. I don't have a witness statement, sir.
Q. Okay. Do you have any written documentation?
A. No, sir.
Q. So you had no witnesses' statements and you had no witness documentation that would have supported your claim that you make in this affidavit, under oath, that Mr. Zaczynski was about to fraudulently dispose of, hide, or withhold property, money, or effects to the satisfaction of defendants' debts; correct?
A. I still believe that there was -- at the time I signed this, there was a reasonable likelihood that that --
Q. Based on what?
A. Based on the total circumstances at the time.
Q. What total -- what circumstances? What total circumstances? The fact that people didn't get pellets would cause you to believe that he's going to fraudulently transfer something? What's that based on?
A. The overall picture was that the party was aware of supply problems, continuing to take orders, was taking people's money, and they were not satisfied.
Q. At the time you signed this affidavit, you didn't even know what the causes were of the failure to supply pellets? You didn't know if that was caused by NEP or its supplier NEWP; correct?
Q. And as you sit here today, you still don’t know whether the supply problem was a product of NEP or, rather, its supplier NEWP; correct?
Q. Are you aware that paragraph 22 of this affidavit is the sole allegation upon which the State of Connecticut was allowed to seize the property of Mr. Zaczynski without a hearing?
A. I guess my problem with responding to that is the term "seize," you know, to me is take something away.
Q. Okay. Attach. I'll switch it. Attach.
A. In that case I would more than likely agree with you, sir.
Q. When you were asked to sign this affidavit, did you object to signing this affidavit with paragraph 22 in it?
A. No, sir.
Q. Do you know what happened to Mr. Zaczynski after he was served with the attachment papers in this case?...
A. That's a broad question, sir.
Q. Do you know what happened to him physically?
A. No, sir.
Q. Do you know what happened to him mentally? A. No, sir.
Q. Are you aware that -- I think it's the day or the day after he was served with these papers, he wound up in the hospital?
A. There was rumors. I didn't investigate his personal life.
Q. Are you aware that he almost died?
A. No, sir, I am not.
Ahlquist left Blumenthal’s service for health reasons and his responsibilities in the case fell to Stephen Hennessey, also deposed by Oliver.
Having determined that Hennessey was unfamiliar with contract formation under the Uniform Commercial Code and did not know that contracts could be established by e-mail, Oliver pointed to a paragraph in an e-mail sent to NEP by its supplier, NEWP: “Added up, this represents a maximum of 18,000 to 20,500 tons that we can realistically make available to you."
Q: Did I read that correctly?The Devil In The Details
Q. Okay. Do you know if NEWP made available to NEP between 18,000 and 20,500 tons of pellets?
Q. Do you know, if it had made those pellets available, whether NEP would have been able to meet its presale commitments to its customers for Connecticut and Massachusetts?
Q. Do you know how many tons of pellets NEP presold to its customers in Connecticut and Massachusetts prior to June 6, 2008?
Q. Do you know whether NEWP refused to ship pellets to NEP in order to force NEP to give up its contract rights to distribute product in New York and New Jersey?
Q. Have you ever investigated that?
The devil is in the details, as everyone knows. What people do not know is that there are increasingly fewer journalists to find the devil, hidden in plain sight in the details.
The NEP depositions taken by Oliver destroy the root assertions made by the so called “investigators” in their affidavit. The affidavit used by Blumenthal to seize NEP’s business machinery at a time when the company was struggling to satisfy its customers was itself defective because the affiant had no personal knowledge of the events cited in the affidavit.
All these details were hidden in plain site – even in Blumenthal’s press release. He noted in the press release that “a wholesaler, New England Wood Pellet of New Hampshire, informed New England Pellet as of May 2008 that it may only be able to supply one half that amount (i.e. half the amount of the pellets it was contractually obliged to fulfill), and by June 2008 the amount the wholesaler could supply dropped to one quarter of the defendants' outstanding delivery obligations.”
E-mails, available to any investigator who wanted seriously to probe the suspected illegalities in the case he was investigating, showed that the supplier, NEWP, had shorted NEP with a view to forcing the company to surrender to it valuable business that NEP had developed.
Blumenthal prosecuted the wrong people.
There was no investigation.
The affiants in both the Hoffman case and the NEP case were not primary witnesses to the events they attested to in their affidavits.
The affidavit in the NEP case included an undocumented and spurious uninvestigated claim that the co-owners of the business were engaging in or about to engage in fraudulent transfers – the sole claim in the affidavit that triggered an ex parte seizure of NEP’s assets.
Suffering from premature press release ejaculation, Blumenthal’s press release in the NEP case was bunk.
This week, following an announcement by U.S. Sen. Chris Dodd that he would not he running for re-election, Blumenthal decided to enter the race, and polls showed him a favored candidate in the race. His poll numbers may be high because, rather than pursue and expose the devil in the details, Connecticut’s media has too often been willing to take Blumenthal’s press releases at face value.
A little digging can be a dangerous thing.
Perhaps Blumenthal will be more sensitive in his new position to the Constitutional rights that, in the 14th amendment, secure the citizens of the United States in their property. Once in the senate, he will not be able to hide so successfully in the underbrush of his office.