United States v. Lindstrom, Lars E. ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-1703
United States of America,
Plaintiff-Appellee,
v.
Commodity Account No. 549 54930
at Saul Stone & Company,
Defendant,
Lars "Erik" Lindstrom,
Claimant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 96 C 8423--Joan B. Gottschall, Judge.
Argued April 21, 2000--Decided July 5, 2000
Before Bauer, Kanne and Evans, Circuit Judges.
Kanne, Circuit Judge. Lars Erik Lindstrom
participated in a pyramid scheme defrauding
hundreds of investors and was convicted by a
Norwegian court of criminal fraud. Nevertheless,
Lindstrom pursued all available means to collect
commissions that he allegedly earned on trades
executed in connection with the criminal scheme,
including contesting the federal forfeitures at
issue here. Lindstrom, however, failed to comply
with the requirements of the Federal Rules of
Civil Procedure for standing to challenge a
government forfeiture, and the district court
granted summary judgment in favor of the
government. We affirm.
I. History
In 1994, Norwegian authorities began
investigating a fraudulent scheme in which
several conspirators, including Sture Stig
S?derman, Torgbjorn Ertzaas and Lars Erik
Lindstrom, had obtained $17 million from 729
Norwegians to invest in American commodities
markets. Under the corporate auspices of Nordisk
R?varuf?rmedling S?derman AB, the scheme promised
investors a "guaranteed monthly profit" of 2
percent and vouched that the group would
reimburse investors for disappointing returns.
Marketing brochures assured investors of "the
highest possible return without risking the
clients’ money" and "always sure profits."
However, in classic pyramid scheme fashion, the
only return investors received from the scheme
came directly from the contributions of new
investors, and almost all the invested funds
eventually were lost through poor trading and
malfeasance. For his part, Lindstrom served as a
trader for the scheme and invested a portion of
the funds in the Chicago commodities exchange,
using accounts at Merrill Lynch and Saul Stone &
Co., including account number 549 54930 at Saul
Stone & Co.
On April 26, 1996, S?derman, Ertzaas and
Lindstrom were indicted for gross fraud in
Trondheim, Norway. Their trial began on September
9, 1996, and Lindstrom fled the country sometime
during the trial and returned to the United
States as a fugitive. The trial finished without
Lindstrom on November 22, 1996, and all three
defendants were eventually convicted in Norway of
criminal fraud on January 13, 1997.
After his return to the United States,
Lindstrom had scrambled desperately to collect
commissions that he allegedly earned on trades
executed in connection with the scheme. First, he
filed an action in Cook County Circuit Court to
recover the commissions under the auspices of
Authority, Ltd., a Bahamian shell company
utilized in the scheme. However, the Bahamian
government liquidated Authority, Ltd. and
promptly placed it in receivership, thereby
halting Lindstrom’s bid to recover the
commissions. Still determined, Lindstrom obtained
a default judgment in the Bahamas for the
commissions against Norwegian Futures & Options
Fund, Ltd., yet another corporate entity involved
in the investment scheme. Then, in early December
1996, he recorded the judgment in Cook County
Circuit Court and won a garnishment order against
the Saul Stone account.
Again, however, government intervention
frustrated Lindstrom’s machinations. On December
20, 1996, citing the use of the Saul Stone
account in connection with the fraudulent
investment scheme, the federal government won a
stay of Lindstrom’s garnishment order and filed
a forfeiture complaint under 18 U.S.C. sec. 981
against the account in federal district court. On
January 3, 1997, the government seized the
$685,192.35 balance, and Lindstrom filed an
unverified claim asserting that he had "a
judgment in his favor . . . now being
approximately $180,000.00 with interest still
accruing," evidenced by an attached copy of the
Cook County garnishment order. Two years later on
February 10, 1999, the district court granted the
government’s motion for summary judgment against
Lindstrom, finding that he lacked statutory
standing to challenge the forfeiture because he
had not verified his complaint nor filed an
answer within twenty days of his claim.
Six months subsequently on August 19, 1999, the
United States Marshal Service released Lindstrom
into Norwegian custody for extradition, in
violation of our order temporarily staying
Lindstrom’s extradition. While the government’s
conduct was the subject of our scrutiny beginning
in Lindstrom v. Graber, 203 F.3d 470 (7th Cir.
2000), and culminating in our recent reprimand of
the United States Attorney’s Office, this matter
did not involve the forfeiture of the Saul Stone
account.
II. Analysis
To initiate a judicial forfeiture, the
government must file a verified complaint
describing with reasonable particularity the
property that is subject to the action, the place
of seizure and any allegations required by the
statute pursuant to which the action is brought.
See Fed. R. Civ. P. Supp., Rule C(2). Claimants
to the property at risk of forfeiture must file
a verified claim within ten days after process
has been executed, stating the interest in the
property by virtue of which the claimant demands
restitution and a right to defend against the
action, and must file an answer within twenty
days after the filing of the claim. See Fed. R.
Civ. P. Supp., Rule C(6). Lindstrom filed a claim
to the account but lacks standing to contest the
forfeiture because he failed to verify his claim
on oath or solemn affirmation and failed to file
an answer within twenty days of his claim. We
review the grant of summary judgment de novo. See
United States v. All Assets & Equip. of W. Side
Bldg. Corp., 58 F.3d 1181, 1186 (7th Cir. 1995).
Lindstrom admits that his claim was unverified
but argues that copies of a court order
establishing himself as judgment creditor to the
Saul Stone account provide sufficient proof of
his interest to satisfy the verified claim
requirement. However, verification is an
"essential element of any claim because of the
substantial danger of false claims." See United
States v. $103,387.27, 863 F.2d 555, 559 (7th
Cir. 1988) (citations omitted); see also United
States v. 51 Pieces of Real Property, Roswell,
N.M., 17 F.3d 1306, 1318 (10th Cir. 1994); United
States v. $2,857.00, 754 F.2d 208, 213 (7th Cir.
1985). Verification forces the claimant to place
himself at risk of perjury for false claims, and
the requirement of oath or affirmation is not a
mere technical requirement that we easily excuse.
Other courts have permitted standing without a
verified claim in special circumstances. See,
e.g., United States v. Various Computers &
Computer Equipment, 82 F.3d 582, 585 (3d Cir.
1996) (ruling that a pro se claimant who filed a
timely claim and answer could proceed when his
claim was based on the district court’s prior
order of restitution); United States v. One Urban
Lot Located at 1 Street A-1, 885 F.2d 994, 1001
(1st Cir. 1989) (allowing a claimant to proceed
after she filed a timely verified answer
containing all the necessary information for a
claim). Nonetheless, in our view, it was proper
for the district court to insist on strict
compliance with Rule C(6) to establish standing
in this case when special circumstances were
absent. See, e.g, United States v. $103,387.27,
863 F.2d at 559; United States v. Amiel, 995 F.2d
367, 371 (2d Cir. 1993).
Furthermore, Lindstrom by his own admission
filed an answer two years after his claim, well
outside the twenty-day window provided by Rule
C(6). He argues that his unverified claim
informed all concerned parties of the basis for
his claim and obviated the need for an answer,
but it was proper for the district court to
insist upon a timely answer in this case. Again,
"[s]trict compliance with Supplemental Rule C(6)
is typically required." Amiel, 995 F.2d at 371;
see also United States v. $104,674.00, 17 F.3d
267, 269 (8th Cir. 1994). Although Lindstrom
claims that he should not be held responsible for
his attorney’s negligence, his attorney’s
mistakes are imputed to him and deprive him of
standing. See United States v. 7108 W. Grand
Ave., 15 F.3d 632, 633 (7th Cir. 1994)
("Claimants in this forfeiture proceeding pose
the question whether their former attorney’s
gross negligence in representing their interests
entitles them to another opportunity to litigate.
The answer is No."); United States v. 8136 S.
Dobson St., 125 F.3d 1076, 1084 (7th Cir. 1997).
Finally, Lindstrom offers an "unclean hands"
theory unsupported by precedent that his
extradition to Norway should somehow entitle him
to contest the forfeiture. The forfeiture
proceeding, however, ended six months before
Lindstrom’s extradition took place, and there is
no connection between the two matters. All
Lindstrom’s mistakes under Rule C(6) occurred in
January 1997, when he was free in the United
States. While the government’s conduct in
extraditing Lindstrom over our stay order brought
a reprimand from this Court in a separate
proceeding, it has no bearing on the forfeiture
of the Saul Stone account.
III. Conclusion
For the foregoing reasons, we Affirm the district
court’s grant of summary judgment.