United States v. Gilbert

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
U.S. COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ELEVENTH CIRCUIT
MAR 16 2001
THOMAS K. KAHN
No. 97-4578 CLERK
D.C. Docket No. 89-00879-CR-NCR
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
MICHAEL GILBERT,
Defendant-Appellee,
KAREN GILBERT, MICHAEL GILBERT FAMILY IRREVOCABLE TRUST,
Third Party Claimants-
Appellees
Appeal from the United States District Court
for the Southern District of Florida
(March 16, 2001)
Before TJOFLAT, EDMONDSON and KRAVITCH, Circuit Judges.
TJOFLAT, Circuit Judge:
This appeal represents the latest – and we hope final – chapter in a protracted
RICO prosecution which has already commanded the attention of four panels of
this court.1 Following our 1996 mandate setting aside the criminal forfeiture of
Michael Gilbert’s interest in a California limited partnership, the Government
moved the district court to force Michael Gilbert and his family2 to file third-party
petitions to reclaim their interests pursuant to 18 U.S.C. § 1963(l), and to restrain
the Gilberts from the use and enjoyment of the previously forfeited property
pending the outcome of the section 1963(l) hearing. The Government contends
that although the judgment forfeiting Michael Gilbert’s partnership interest has
been set aside, the Gilberts should be forced to file third-party petitions because
Michael derived his partnership interest as a subsequent transferee of Benjamin
Kramer, one of his co-defendants whose silent interest in the limited partnership
remains forfeited to the United States.
1
See United States v. Kramer, 864 F.2d 99 (11th Cir. 1988) (non-argument calendar);
United States v. Kramer, 912 F.2d 1257 (11th Cir. 1990); United States v. Kramer, 73 F.3d 1067(11th Cir. 1996); and the instant appeal.
2
We refer to Michael Gilbert, his wife Karen Gilbert, and the Michael Gilbert Family
Irrevocable Trust (the “Trust”) collectively as the Gilberts. We refer to them by their first names
or simply as the Trust to designate them individually.
2
We conclude that the district court did not abuse its discretion in denying the
Government’s request. The statutory scheme outlined in section 1963(l) does not
permit the Government’s attempt to force the Gilberts to file third-party petitions.
Moreover, we note that even if section 1963(l) did allow such an action by the
Government, the subsequent proceeding would be needless because the order of
forfeiture upon which the Government relies is invalid. Accordingly, we affirm the
district court’s denial of the Government’s motion to force the Gilberts to file
third-party petitions pursuant to 18 U.S.C. § 1963(l) and to restrain the Gilberts
from the use and enjoyment of their property.
I.
A.
The Bell Gardens Bicycle Club (the “Club”) was created on December 5,
19833 as a joint venture between two California partnerships: LCP, a general
3
The history of the case recited herein is a summary of the records from both the
criminal RICO proceedings, see supra n.1, and the ancillary proceedings that followed the
criminal trial, in which the court adjudicated third-party claims to the defendants’ forfeited
property. See infra, Part I.E.
3
partnership,4 and Park Place Associates, a limited partnership (“PPA”).5 PPA had
received an exclusive license from the City of Bell Gardens to operate a card club
in 1982, but was unable at that time to raise enough money to buy land and begin
construction. PPA thus entered into a joint venture agreement with LCP, which
offered to find the funds necessary to finance the Club’s construction. For its part,
PPA agreed to contribute its rights to property in the City of Bell Gardens as well
as the gaming license it had already obtained.6
4
LCP was a general partnership from its creation on December 5, 1983 until its
reorganization as a limited partnership, “LCP Associates, Ltd.,” on November 15, 1984. For the
sake of simplicity, we refer to the limited partnership as “LCP, Ltd.”
5
The Club has been described as:
the world’s largest card club. It is located in a 100,000 square foot building on an
8.5 acre parcel in the City of Bell Gardens, California. The [Club] does not
generate revenue by participating in the card games it houses. Instead, the Club
rents space to card players for an hourly fee, providing the assistance of expert
dealers. The Club is open 24 hours a day, 365 days a year, and employs more
than 1800 persons. In 1990, it was generating after-tax profits of $23 million per
year and was estimated to be worth $150 million. Taxation of the Club is the
primary source of revenue for the City of Bell Gardens.
Michael S. Pasano, The Saga of the Bell Gardens Bicycle Club – Lessons and Nightmares, 1998
ABA Center for Ctr. for Continuing Legal Educ. Nat’l Inst. Sec. Crim. Just. [hereinafter “The
Saga”]. We note that the author, Mr. Pasano, is co-counsel representing the Gilbert family
interests in this appeal.
In 1990, the Government took over the Club after a jury forfeited it to the Government as
proceeds of racketeering activity. The Government has faired little better than the previous
owners in purging the stain of corruption and scandal surrounding the Club. See Sharon Walsh,
Crime Alleged at Casino U.S. Partly Owns, Wash. Post, Mar. 20, 1996, at D3; see also James
Bornemeier, U.S.- Owned Casino Overrun by Crime, Security Chief Alleges, L.A. Times, Mar.
20, 1996, at B3.
6
The Joint Venture Agreement provided for the following profit distribution: 70% to
LCP and 30% to PPA until the Club’s loan was paid off, and then the figures were to be 60% to
4
Unbeknownst to PPA, one source of funding located by LCP was a large-
scale money laundering operation.7 From 1982 to 1987, Benjamin Kramer and
three of his partners (Randy Lanier, George Brock, and Gene Fisher) were
involved in an intricate scheme to import large quantities of marijuana into the
United States. See United States v. Kramer, 73 F.3d 1067, 1070 (11th Cir. 1996);
United States v. Kramer, 807 F. Supp. 707, 710 (S.D. Fla. 1991); see also United
States v. Kramer, 955 F.2d 479 (7th Cir. 1992). The details of this bold
undertaking and the elaborate money laundering operation that followed are
described in great detail in Kramer, 807 F. Supp. at 710-736. Of significance in
the instant appeal is that approximately $12.6 million of the initial $22 million
needed to build the Club came from proceeds of Kramer’s marijuana smuggling
operation.8
The level of complicity in the money laundering plan varied among the LCP
partners. The three original LCP partners – Dale Lyon, Julie Coyne, and David
Pierson – were brought together in 1983 by Michael Gilbert’s father, Sam Gilbert.
LCP and 40% to PPA. Additionally, there was a provision stating that when the Club’s profits
reached six million dollars, the split was to be 65/35 in favor of LCP. This six million dollar
threshold has been reached, but the record does not indicate when this happened.
7
PPA was unaware of the money laundering scheme and has been cleared of any
wrongdoing. See United States v. Kramer, 807 F. Supp. 707, 736 (S.D. Fla. 1991).
8
The rest of the Club’s financing was obtained through legitimate lending institutions.
5
Sam, a wealthy Los Angeles businessman, was the first Gilbert to establish ties
with the Kramer family when he befriended Benjamin Kramer’s father, Jack
Kramer, in 1978. At that time, Jack Kramer and Sam Gilbert came up with the
idea of building a legal card club for the purposes of laundering Benjamin
Kramer’s dirty money. By 1983, Sam Gilbert was in contact with David Pierson,
who was himself thinking of building a card club and was looking for legitimate
investors. Pierson gave Sam Gilbert a prospectus, Sam liked what he saw, and
Sam agreed to arrange the financing for the project in return for a sixty percent
share of Pierson’s ownership interest in the Club.
Sam Gilbert went to work putting together a team to undertake the financing
side of the project. To that end, Sam Gilbert brought in Dale Lyon, a banker and
businessman, and Julie Coyne, who had an experienced background in personnel.
For some time, Lyon, Pierson, Coyne, and Sam Gilbert discussed the ownership
percentages of what would become the LCP general partnership. Then, for little or
no consideration, Sam Gilbert gave his entire sixty percent interest in LCP to the
newcomers Lyon and Coyne in equal shares.9 At the end of the day, Lyon and
9
When Sam Gilbert was not laundering drug money for Benjamin Kramer, Sam owned
and operated a construction company. The best explanation for why Sam agreed so readily to
give up his majority interest in what was to become LCP was that Pierson, Lyon, and Coyne all
agreed that Sam’s construction company would build the Club and that Sam would receive a
10% fixed-fee contract. According to testimony at trial, Sam thought the casino card club
business was too risky a venture and he was content simply making his money by building the
6
Coyne each owned a thirty percent interest in LCP and Pierson controlled the other
forty percent interest.
While Sam Gilbert, Lyon, Coyne, and Pierson were negotiating their
respective interests in LCP, Coyne, Sam Gilbert, and Lyon set up CGL Investment
Company, Inc. (“CGL”). CGL was created to pose as a legitimate mortgage broker
that would fund and invest in real estate projects, specifically, the Club. Shortly
after Sam Gilbert had taken the necessary steps to organize both LCP and CGL, he
met with Jack Kramer to explain the money laundering scheme, referring at that
time to the new LCP partners and PPA as “your straw people. [The] lily-white
people who will be approved by the Gambling Commission.” Kramer, 807 F.
Supp. at 712-13.
Approximately $12.6 million of Benjamin Kramer and his three associates’
drug money was sent to CGL from a sham lending firm named Troon Mortgage
Investment company (“Troon”), located in Tortola, which is part of the British
Virgin Islands. Troon received the drug money from a trust called the BRT trust,
located in Liechtenstein.10 Sam Gilbert arranged for the money to be sent from
Club.
10
Following the criminal RICO trial, the district court held ancillary proceedings to
determine issues of ownership in the property forfeited to the Government. See infra Part I.E.
According to the district court’s findings following the ancillary proceedings, the three letters
that form the BRT name stand for Ben, Randy, and Tom – the first names of the drug smuggling
7
Troon to CGL in the form of a loan. CGL then forwarded the money to the Club,
once again in the form of a loan. In appreciation for the loan, Sam Gilbert
promised Benjamin and Jack Kramer that they would retain their lender’s rights of
repayment of principal at a fifteen percent rate of interest (payable over fifteen
years). In addition, Troon was to receive a fifteen percent income participation
“kicker” payable over the life of the project.
With the necessary funds in hand, construction on the Club began in January
1984. By the fall of the same year, however, it became obvious that an additional
$10 million would be needed to finish the project. To this aim, the LCP general
partners asked Sam Gilbert to personally guarantee a $5 million loan that LCP had
negotiated from a legitimate lending institution. Sam Gilbert refused to provide
this guarantee but indicated that his son, Michael Gilbert, might be interested.11
Sam Gilbert told Michael of LCP’s need for additional financing and informed him
that a twenty percent interest in LCP was available for $200,000. Michael Gilbert,
in turn, discussed this opportunity with his siblings, Robert and Margaret. In
partners: Ben Kramer, Randy Lanier, and George Brock (who was also known as Tom). See
Kramer, 807 F. Supp. at 736. The district court also found that the first flow of money from
Liechtenstein to Troon was on January 29, 1984, which coincides with the time construction on
the club began. See id. at 713.
11
Michael Gilbert was involved with the Club even before he was approached by the
LCP partners. As the president of his father’s construction company, he supervised the Club’s
construction.
8
November 1984, after some negotiations with the LCP partners, Michael, Robert,
and Margaret bought a twenty percent interest in LCP in exchange for $200,000
and an agreement to guarantee a $5.5 million loan to help finish construction of the
Club. Coyne and Pierson each gave up ten percent of their interest in LCP to carve
out the twenty percent share.12
Gilbert and his siblings obtained a $200,000 loan from the Olympic National
Bank to purchase the twenty percent interest in LCP. By agreement of the parties,
LCP, rather than Michael Gilbert or his siblings, made the interest payments on the
loan, and the loan principal was paid directly out of Michael Gilbert’s and his
siblings’ profit distributions. As a result of Michael, Robert, and Margaret buying
this twenty percent ownership interest, LCP, which had from its inception been
organized as a general partnership, was reorganized into a limited partnership
(“LCP, Ltd.”) on November 15, 1984.13
12
According to both Coyne’s and Pierson’s testimony during the ancillary hearing
following the criminal trial, they each gave up ten percent of their ownership interest in LCP
because it made sense to give up a little and see the Club open, rather than have a larger
ownership interest in an unfinished construction project.
13
The Limited Partnership Agreement, which was not introduced into evidence at trial,
provides that “[t]he General Partners shall cause to be executed and shall execute an amendment
to the JOINT VENTURE AGREEMENT reflecting the conversion of [LCP] into a Limited
Partnership.” In a letter submitted to this court at our request, however, the Government informs
us that it was “unable to locate or identify any documentary or testimonial evidence presented in
either the criminal trial or the ancillary forfeiture proceeding . . . showing that the December 5,
1983 Joint Venture Agreement between LCP Associates and Park Place Associates was ever
formally amended to substitute LCP Associates Ltd. (the limited partnership) for LCP Associates
9
The newly acquired twenty percent interest in LCP, Ltd. was divided among
the members of the Gilbert family as follows: Michael and Robert each received
one-third (or 6.67% each) and the remaining one-third was divided equally among
Margaret, Michael’s three children, and Robert’s four children. Both Michael and
Robert placed their children’s shares in trust by creating, respectively, the Michael
Gilbert Family Irrevocable Trust (the “Trust”) and the Robert Gilbert Family
Irrevocable Trust. In total, Michael Gilbert and the Trust owned approximately a
ten percent interest (9.1675%) in LCP, Ltd.
The Club opened for business on November 30, 1984. Although the Club
was not immediately successful, it started turning a substantial profit within six
months. In 1989, the Club’s after-tax profits were approximately $23 million.
Starting in December 1984, the Club made regular mortgage payments on the CGL
loan. LCP, Ltd. also paid CGL its fifteen percent profit participation on a monthly
basis. In turn, CGL forwarded the mortgage payments and the kicker to Troon.14
(the general partnership).” Thus, we question whether there was ever a novation in the Joint
Venture Agreement whereby LCP, Ltd. assumed the rights and/or obligations of the LCP general
partnership as a member of the Bell Gardens Bicycle Club Joint Venture. See Restatement
(Second) of Contracts § 280 (1979) (explaining that a novation substitutes a new party and
discharges one of the original parties to a contract by agreement of all three parties; a new
contract is created with the same terms as the original one, but the parties are changed).
14
By mid-1985, CGL had apparently sent Troon $860,000 in repayment on the loan.
10
In 1986, the net quickly closed in on Benjamin Kramer’s money laundering
operation. Benjamin Kramer’s contact in Tortola who ran Troon was arrested by
British police. Shortly after the arrest, the Drug Enforcement Administration
(“DEA”) obtained Troon’s records and launched a joint investigation with the
Internal Revenue Service into the Club’s financing. In November 1986, DEA
agents interviewed Sam Gilbert, Michael Gilbert, and others as part of an
investigation into the possible use of drug proceeds to build the Club.
Compounding Benjamin Kramer’s woes was the fact that the Club was now
turning a substantial profit and, as Jack Kramer testified during the ancillary
hearing following the criminal trial, “the Devil raised his head” and Sam Gilbert
decided to make the Kramer interest in the Club disappear. Kramer, 807 F. Supp.
at 731. Sam Gilbert swiftly forced Benjamin Kramer out by reneging on the
fifteen percent kicker and then refinancing the balance due on the $12.6 million
mortgage loan at a more favorable interest rate through a legitimate lending
institution. Forcing Benjamin Kramer out was easily accomplished, since his name
had been intentionally left off of all Club documents to hide his illegitimate
ownership interest. At the same time the $12.6 million loan was being refinanced,
11
Michael Gilbert and Lyon, at a CGL Board of Director’s meeting,15 authorized the
transfer of $9.5 million in the form of a cashier’s check as repayment of CGL’s
obligation to Troon.16 The Government later traced the $9.5 million transfer to a
Bank account in Luxembourg.17
B.
On November 24, 1987, a Southern District of Florida grand jury returned
an indictment charging Benjamin Kramer, Jack Kramer, Michael Gilbert, and
Melvin Kessler (an attorney who is of no consequence to this appeal), with various
violations of the RICO statute,18 the Travel Act,19 and conspiracy to defraud the
15
Michael Gilbert became involved with CGL when he accepted a position as Vice-
President in June or July 1985.
16
The $9.5 million was apparently transferred to Lyon’s bank, The Bank of Beverly
Hills, converted to a cashier’s check, deposited into a Swiss bank account and later transferred to
Luxembourg.
17
Although the Government put on no evidence to explain what happened to this $9.5
million, Jack Kramer testified during the ancillary hearing following the criminal proceeding that
the money was divided among Benjamin Kramer and his drug smuggling partners.
18
RICO is an acronym for the Racketeer Influenced and Corrupt Organizations Act. See
18 U.S.C. §§ 1961-68 (1994). The “prohibited activities” section of RICO states:
(a) It shall be unlawful for any person who has received any income derived,
directly or indirectly, from a pattern of racketeering activity or through collection
of an unlawful debt in which such person has participated as a principal within the
meaning of section 2, title 18, United States Code, to use or invest, directly or
indirectly, any part of such income, or the proceeds of such income, in acquisition
of any interest in, or the establishment or operation of, any enterprise which is
engaged in, or the activities which affect, interstate or foreign commerce. . . .
(b) It shall be unlawful for any person through a pattern of racketeering activity or
12
Internal Revenue Service.20 Specifically, the RICO count alleged that the
defendants had been engaged in a scheme to launder money generated from
trafficking marijuana.
The indictment also included a RICO forfeiture count in which the
Government alleged that all four of the defendants had “property constituting, and
derived from, proceeds which they obtained, directly or indirectly, from
racketeering activity . . . thereby making such property and the entire interest of the
defendants, therein or an amount of cash equivalent thereto including but not
limited to the amount of $50,000,000.00, forfeitable to the United States pursuant
to Title 18, United States Code, Section 1963(a)(3).” Next, the forfeiture count
explained that “the said $50,000,000.00 constituting, and derived from, such
though collection of an unlawful debt to acquire or maintain, directly or
indirectly, any interest in or control of any enterprise which is engaged in, or the
activities of which affect, interstate or foreign commerce.
(c) It shall be unlawful for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity or collection of
unlawful debt.
(d) It shall be unlawful for any person to conspire to violate any of the provisions
of subsection (a), (b), or (c) of this section.
18 U.S.C. § 1962.
19
The Travel Act prohibits the interstate travel or transportation in furtherance of a
racketeering enterprise. 18 U.S.C. § 1952 (1994).
20
On December 13, 1988, a superseding indictment was returned. Sam Gilbert was
named in the original indictment but died in November 1987, and the indictment against him was
dismissed. Kramer, 807 F. Supp. at 709.
13
proceeds includes but is not limited to the property described as” the Club. A legal
description of the Club as set forth in the title document followed.21
C.
On March 28, 1990, following a three month trial, the jury found Benjamin
Kramer and Jack Kramer guilty of, inter alia, conspiring to racketeer under 18
U.S.C. § 1962(d) and of committing substantive racketeering acts under 18 U.S.C.
§ 1962(c). After having some difficulty arriving at a unanimous decision, the jury,
two days later, found Michael Gilbert guilty of three counts of violating the Travel
Act, 18 U.S.C. § 1952, and one count of racketeering under 18 U.S.C. § 1962(c).22
Kramer, 73 F.3d at 1070.
21
Specifically, this portion of the indictment reads in relevant part: “THE BELL
GARDENS BICYCLE CLUB, 7301 Eastern Avenue, Bell Gardens, California, a card club
casino, consisting of a commercial building and three parcels of real property located within the
city of Bell Gardens, California, of the following legal description . . . .” The legal description of
the three parcels followed. Nowhere in the indictment is mention made of the Club’s contents,
the Club’s profit distributions or current valuation, the Club’s owners and their respective
ownership interests, LCP, Ltd., PPA, or CGL, or whether the $50 million mentioned in the
indictment was intended as a substitute for forfeiting the Club.
22
We take this opportunity to correct a misprint in our 1996 opinion which states that
Michael Gilbert was convicted of “one count of violating the RICO statute, 18 U.S.C. §
1962(d).” Kramer, 912 F.2d at 1070. Michael Gilbert, in fact, was acquitted of the conspiracy
charge under section 1962(d) but found guilty of the substantive RICO violation under section
1962(c).
14
D.
Following these convictions, on April 2, 1990, the same jury considered the
forfeiture issue in a separate proceeding. At the outset of the forfeiture phase, the
Government called one witness, the Club’s chief financial officer, through whom it
introduced charts illustrating the origins of the various monies that went into
building the Club as well as the Club’s profit distributions. A slice taking up
slightly more than half of one pie chart reflected the infusion of mortgage money
originating from Troon and passing through CGL. The Government rested and
closing arguments ensued.
Michael Gilbert was the only defendant who argued against forfeiture of the
Club. Benjamin Kramer and Jack Kramer, through their counsel, informed the jury
in their respective closing arguments that they did not have, and for that matter
never had, an ownership interest in the Club. In fact, to stress this point, Benjamin
Kramer’s attorney openly invited the Government to enter into a stipulation
whereby it could have whatever interest Benjamin Kramer had in the Club.23
23
Shortly before this trial in Florida, a jury in the Southern District of Illinois found
Benjamin Kramer guilty of conspiring to distribute marijuana and of participating in a
continuing criminal enterprise. The district court sentenced him to life in prison without the
possibility of parole and a separate, concurrent forty-year term of imprisonment. In addition, the
Illinois jury returned a $60 million forfeiture verdict against Benjamin Kramer. See generally
United States v. Kramer, 955 F.2d 479, 481-82 (7th Cir. 1992) (affirming his convictions and
sentences). Given Benjamin Kramer’s future prospects in the federal penitentiary and the rather
large outstanding forfeiture judgment against him in Illinois, one can appreciate why the federal
15
In its closing argument on the forfeiture issue, the Government advanced its
theory that “[t]he [Club] was built from the first shovel of dirt being taken out of
the ground with drug money that came from Ben Kramer’s marijuana smuggling.
It was forfeitable from that very point forward.” The Government further argued
that forfeiture of the entire Club was proper and that the jury “ought not be
concerned with . . . the innocent people here . . . [because] those individuals [could
later] petition the court to get back any interest that they have” in the Club. In
addition to the Club, the Government sought forfeiture of $9.5 million representing
the amount wired from LCP, Ltd. to Troon in 1986.24
Following closing arguments on the forfeiture issue, the court instructed the
jury that “the term ‘forfeiture’ means to be divested or deprived of the ownership
of something as penalty for the commission of a crime.” The court then explained
that “to be entitled to such forfeiture, the Government must have proved beyond a
reasonable doubt . . . [t]hat the proceeds or property forfeited was obtained,
prosecutor in Florida elected to go after a piece of real property in California rather than settle
for yet another large (but sure to be symbolic) money judgment. Randy Lanier and Gene Fisher,
two of Benjamin Kramer’s drug smuggling associates, were defendants in the Illinois trial and
were also found guilty and sentenced to life imprisonment without the possibility of parole.
George Brock (a/k/a Tom) was also indicted in Illinois but did not stand trial because he became
a fugitive from justice. Kramer, 955 F.2d at 483 n.2.
24
The Government also asked the jury to forfeit $280,000, which represented monies that
passed through Mel Kessler’s trust account. The jury held the Kramers and Kessler jointly and
severally liable for $280,000.
16
directly or indirectly, by the Defendant, as charged; and . . . [t]hat such proceeds or
property were obtained by the specified Defendant . . . from . . . racketeering
activity.” Before it sent the jury out to deliberate, the court gave the jury special
verdict of forfeiture forms to complete for each defendant.
The special verdict of forfeiture forms asked the jury whether the Club
“constituted or was derived from any proceeds which [the named defendant]
obtained directly or indirectly from racketeering activity.” If the jury answered
“yes” to that question, it then had to “indicate whether the [Club] is subject to
Forfeiture.” The jury answered “yes” to both questions on the verdict forms
pertaining to Benjamin and Jack Kramer. In addition, the jury forfeited the $9.5
million that LCP, Ltd. sent to Troon in 1986, and held Benjamin and Jack Kramer
jointly and severally liable for that amount.25 With respect to Michael Gilbert, the
jury struggled to come to a consensus on its forfeiture verdict pertaining to the
Club.26 The following day, the jury ultimately answered “yes” to both questions.27
25
The special verdict of forfeiture form pertaining to the $9.5 million read: “Do you find
beyond a reasonable doubt that the Nine and one Half (9.5) million dollars, or any portion
thereof, is subject to forfeiture as to [the named defendant]? If the answer above is yes, how
much was so proved?”
26
The jury did not mark a simple “yes” or “no” on Michael Gilbert’s verdict form. The
jury found that the Club was proceeds of racketeering but that, with respect the Michael Gilbert,
the Club was only forfeitable “as to the portion attributable to the CGL loans and Michael
Gilbert [sic] ownership in the [Club] via CGL Investments.” The court, sua sponte, expressed
concern that the jury’s answer was unclear; the Government and Michael Gilbert’s attorney
disagreed as to the significance of the jury’s qualification. The court sent the jury back to
17
Notably, the jury was never asked to delineate the extent of either Michael
Gilbert’s, Benjamin Kramer’s, or Jack Kramer’s ownership interest in the Club.
For that matter, the jury was never asked to decide whether the Kramers even had
an ownership interest in the Club. Over objection, the court disregarded Michael
Gilbert’s proposed special verdict forms and instructions that addressed both of
these concerns.
E.
On April 3, 1990, at an impromptu hearing convened by the district court a
few hours after the jury agreed to forfeit Michael Gilbert’s interest in the Club, the
prosecutor handed the court and those non-defendant parties interested in the Club
who were then present a “motion for order of forfeiture and for order of seizure,
deliberate further. After a short while, the jury sent the court the following note: “Yes, subject to
forfeiture as to any and all interest in the [Club] which Michael Gilbert obtained from his
ownership in CGL Investments, and [Club] profit participation in CGL Investments.” This
response, too, was deemed unacceptable, so the court sent the jury home for the night and
summoned them to return in the morning. The next morning, the jury continued its deliberation
and shortly thereafter came back with a simple “yes” to the second question on the verdict form.
Over a defense objection, the court accepted the verdict and excused the jury.
27
In 1993, Michael Gilbert was tried and convicted in the Southern District of Florida for
money laundering as well as obstruction of justice and perjury based on his testimony in the
1990 RICO criminal trial, Kramer, 73 F.3d at 1070, and he was sentenced on August 27, 1993 to
twenty-three years in prison. In January 1996, we reversed Gilbert’s money laundering
conviction. Id. at 1072-73. According to Michael Gilbert’s attorney, after having served
approximately sixty-three months in jail, Michael Gilbert was released in February 1996. See
The Saga, supra note 5.
18
entry of restraining orders and appointment of interim trustee.” The interested
parties – persons asserting legitimate ownership interests in the now-forfeited Club
– hurriedly entered objections, but “the district court entered the government’s
proposed order for forfeiture, and also seized the Club in its entirety, appointed an
interim trustee, and prevented the Club or its owners from distributing profits or
transferring their interests.” Kramer, 912 F.2d at 1259.28
On or about April 27, the interested parties petitioned the district court29 for
an ancillary hearing pursuant to 18 U.S.C. § 1963(l)(2), which states that “[a]ny
person, other than the defendant, asserting a legal interest in property which has
been ordered forfeited to the United States pursuant to this section may . . . petition
the court for a hearing to adjudicate the validity of his alleged interest in the
property.”30 The parties also asked the court for relief from or stay of the
28
The power to arrive at this rather dramatic result is found in 18 U.S.C. § 1963(e). At
the time of the trial and ancillary proceedings, this provision read:
Upon conviction of a person under this section, the court shall enter a judgment of
forfeiture of the property to the United States and shall also authorize the
Attorney General to seize all property ordered forfeited upon such terms and
conditions as the court shall deem proper. Following an entry of an order
declaring the property forfeited, the court may, upon application of the United
States, enter such appropriate restraining orders or injunctions, require the
execution of satisfactory performance bonds, appoint receivers, conservators,
appraisers, accountants, or trustees, or take any other action to protect the interest
of the United States in the property ordered forfeited.
29
Michael Gilbert was among the parties who filed verified petitions.
30
To defeat the government’s entitlement to the forfeited property, a third-party must
establish by a preponderance of the evidence that:
19
restraining orders previously placed on the Club. Kramer, 912 F.2d at 1259.
Without addressing the merits of the third-parties’ ownership claims, the district
court “maintained the restraining order, pending final resolution of the scope of the
forfeiture of the Club in a hearing required under 18 U.S.C. § 1963(l).” Id.Despite the requirement that “[t]he hearing on the petition shall, to the extent
practicable and consistent with the interests of justice, be held within thirty days of
the filing of the petition,” 18 U.S.C. § 1963(l)(4) (emphasis added), the district
court’s promise of an ancillary hearing went unfulfilled for the next four months.
Kramer, 912 F.2d at 1257, 1259. In light of the district court’s failure to comply
with the statutory mandate, the LCP, Ltd. partners who claimed a legal interest in
the Club31 appealed on an expedited basis to this court for relief.32 See Kramer,
(A) the petitioner has a legal right, title, or interest in the property, and such right,
title, or interest renders the order of forfeiture invalid in whole or in part because
the right, title, or interest was vested in the petitioner rather than the defendant or
was superior to any right, title, or interest of the defendant at the time of the
commission of the acts which gave rise to the forfeiture of the property under this
section; or
(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in
the property and was at the time of purchase reasonably without cause to believe
that the property was subject to forfeiture under this section;
the court shall amend the order of forfeiture in accordance with its determination.
18 U.S.C. § 1963(l)(6). If the third-party successfully establishes one of these two grounds, the
forfeiture order must be amended to reflect the third-party’s legitimate ownership interest in the
property. 18 U.S.C. § 1963(l)(6).
31
In a footnote, this court set out those claiming an interest in the Club by virtue of their
ownership in LCP, Ltd.. The court also set out their respective LCP, Ltd. ownership interests.
Those claiming an interest were:
a) M. Dale Lyon – 28% owner and general partner of LCP.
20
912 F.2d. 1258. PPA did not join in the appeal, presumably because “the
government quickly relinquished any opposition to [PPA’s] claim because of its
non-involvement in money laundering.” Kramer, 807 F. Supp. at 710.33 On
September 7, 1990, this court concluded that the district court had “erred by not
holding a hearing required by § 1963(l) within the statutory thirty day period after
b) The Lyon Children Trust – 2% owner and limited partner of LCP.
c) David C. Pierson – 30% owner and general partner of LCP.
d) Lois J. Pierson – former spouse of David Pierson and owns one-half of his
interest in LCP under California community property law.
e) Julieann Coyne Wasson – 20% owner and limited partner of LCP.
f) Christopher Wasson–spouse of Julieann Coyne Wasson and owns one-half of her
interest in LCP under California community property law.
g) Michael Gilbert – only member of appellants that was a defendant at trial;
6.67% owner and limited partner of LCP.
h) Karen Gilbert – spouse of Michael Gilbert and owns one-half of his interest in
LCP under California community property law.
i) Robert Gilbert – 6.67% owner and limited partner of LCP.
j) Margaret Gilbert – .8325% owner and limited partner of LCP.
k) The Michael Gilbert Family Irrevocable Trust – 2.4975% owner and limited
partner of LCP.
l) The Robert Gilbert Family Irrevocable Trust – 3.33% owner and limited partner
of LCP.
Kramer, 912 F.2d at 1258 n.2.
32
Michael Gilbert joined the appeal “as a means of preserving his rights in the event the
district court grant[ed] his pending motion to set aside the forfeiture verdict against him.”
33
On May 23, 1990, the district court, in accordance with the Government’s stipulation
with PPA, permitted the PPA partners to receive their monthly profit distributions. On
September 13, 1990, the court accepted a stipulated release of PPA’s 35% ownership interest in
the Club on the ground that PPA was an innocent owner under 18 U.S.C. § 1963(l). On July 9,
1990, the Government entered a stipulation with Sanwa Bank, one of the Club’s legitimate
mortgage lenders, whereby it agreed that “Sanwa has a valid and legitimate interest in the real
and personal property of the Club, is an innocent person within the meaning of 18 U.S.C. § 1963,
is a bona fide purchaser for value of its interest . . . and was at the time of purchase reasonably
without cause to believe that the Club[] . . . was subject to forfeiture under 18 U.S.C. § 1963.”
21
the filing of the claimants’ petitions or a reasonable time thereafter,” Kramer, 912
F.2d at 1260, and directed the district court to commence ancillary hearings within
thirty days.
The ancillary hearings began on September 10, 1990. Michael Gilbert,
through his attorney, argued that he should be allowed to participate in the
proceedings and show that he was a bona fide purchaser of his interest in the Club.
The Government opposed the motion, pointing out that section 1963(l)(2) states
that only persons “other than the defendant . . . may . . . petition the court for a
hearing to adjudicate the validity of his alleged interest in the property.” 18 U.S.C.
§ 1963(l)(2) (emphasis added). The court agreed, and summarily barred Michael
Gilbert from participating in the ancillary proceedings.
On September 28, 1990, the district court continued the ancillary proceeding
to allow the Government and the third-parties to engage in settlement discussions.
Both Coyne and Pierson, among others, settled with the Government.34 As a result,
Lyon was the only founding LCP partner to participate in the ancillary proceeding
34
Pierson, Pierson’s wife, Lyon’s wife, Coyne, Coyne’s husband, Robert Gilbert,
Margaret Gilbert, and the Robert Gilbert Family Irrevocable Trust settled with the Government.
The terms of the settlement were not disclosed to the district court before the ancillary hearing
for fear that they might influence the court’s decision.
22
through its conclusion. Joining him were the Lyon Family Trust, Karen Gilbert,
and the Trust.35
In a lengthy Amended Final Order of Forfeiture dated July 22, 1991, the
district court found that the “real owners” of the Club at its inception were
Benjamin Kramer and his three drug smuggling associates (Randy Lanier, George
Brock, and Brock’s half-partner, Gene Fisher) – Benjamin Kramer was not the sole
owner since he only contributed approximately $4 million (or 1/3) of the initial
$12.6 million mortgage proceeds used to build the Club. Kramer, 807 F. Supp. at
736. In making this finding, the district court leaned heavily on the fact that
“[f]rom the evidence the [Club] is adequately capitalized if Ben [Kramer] and
partners are the real owners, but not so if Ben’s money was found to be only a
loan.” Id. at 725. In light of the Club’s negative asset structure (if the drug
proceeds are ignored), the district court found that the LCP, Ltd. and PPA
partners36 were merely straw persons whose purpose was to obtain the requisite
35
Christine Kramer, the former wife of Benjamin Kramer, also tried to establish that she
was the legitimate owner of one-half of her ex-husband’s interest in the Club. The court denied
her petition in its entirety. Kramer, 807 F. Supp. at 742-43.
36
The district court concluded that PPA as well as Robert and Margaret Gilbert were
unaware of the money laundering scheme “but the others (LCP and Michael Gilbert) were
involved heavily, or knew or should have known of the illicit nature of the operation. Julie
Coyne and possibly David Pierson, too, may well fall into the latter category; whether they fit
into any of the categories or were duped by Sam, et al., are questions this court does not have to
decide.” Kramer, 807 F. Supp. at 736.
23
licenses for a card club and make the Club look legitimate, id. at 736, and that the
three original LCP general partners were nominees37 for the investments of
Benjamin Kramer and his three drug-smuggling associates. Id. at 739.
Faced with trying to delineate the extent of third-party Lyon’s ownership
interest in the Club, the court concluded that “[w]hatever interest Ben Kramer had
at [the time he and his three drug-smuggling associates loaned approximately $12
million to LCP] precludes Lyon, under the relation back doctrine, from asserting
either that title was vested in him rather than the Defendant Ben Kramer or that he
was a title holder superior to Ben Kramer’s interest.” Id.38 Because forfeiture
37
The term nominee refers to someone “designated to act for another as his
representative in a rather limited sense.” Schuh Trading Co. v. Comm’r, 95 F.2d 404, 411 (7th
Cir. 1938). “[N]ominee in its commonly accepted meaning connotes the delegation of authority
to the nominee in a representative or nominal capacity only, and does not connote the transfer or
assignment to the nominee of any property in or ownership of the rights of the person
nominating him.” Ott v. Home Sav. & Loan Ass’n, 265 F.2d 643, 647 (9th Cir. 1958) (quoting
Cisco v. Van Lew, 141 P.2d 433, 438 (Cal. App. 2d 1943)).
38
The district court correctly determined that whatever interest the Government held in
Benjamin Kramer’s forfeited property dated back to the time of the act that made the Club
subject to forfeiture; that is, when Benjamin Kramer first invested his drug proceeds in the Club.
Kramer, 807 F. Supp. at 738. This means that any subsequent transfer of part or all of a
defendant’s tainted property does not automatically extinguish the government’s superior
entitlement to the property. See United States v. Bissell, 866 F.2d 1343 (11th Cir. 1989). This is
known as the relation back doctrine. It was codified in the RICO statute, 18 U.S.C. § 1963(c)
(reprinted infra note 43), as part of the 1984 amendments to “close a potential loophole in
current law whereby the criminal forfeiture sanction could be avoided by transfers that were not
‘arms’ length.’” See S. Rep. No. 98-225, 200-01 (1984), reprinted in 1984 U.S.C.C.A.N. 3383-
3384. Congress reasoned that “[a]bsent application of this principle a defendant could attempt to
avoid criminal forfeiture by transferring his property to another person prior to conviction.” Id.
at 200. A third-party whose property has been made part of a forfeiture order must file a petition
in the ancillary hearing in order to contest the forfeiture.
24
under RICO reaches only the ownership interest held by the defendant (and
Benjamin Kramer’s three drug-smuggling associates had not been indicted), the
district court denied “Lyon’s petition in the amount of one-third (1/3) of his current
holdings in LCP” since Benjamin Kramer’s share of the invested drug proceeds
was approximately $4 million of the total $12.6 million investment, or one-third.
Id. The district court also concluded that Lyon was not a bona fide purchaser of
that portion of his interest. Id. at 740.
Michael Gilbert’s wife, Karen, also participated in the ancillary hearings.
She claimed an interest in the Club by virtue of the fact that, as Michael Gilbert’s
wife, California community property laws entitled her to half of her husband’s
interest in the Club at the time Michael Gilbert bought into LCP. The court denied
her petition in its entirety, reasoning that she was not a bona fide purchaser because
she “knew, or at least should have known of the tainted nature of her husband’s
interest.” Id. The court also denied the claim of the Trust. Id. at 742.
Following the ancillary hearings, Karen Gilbert and the Trust appealed the
district court’s decision denying them any interest in the Club.39 These appeals
39
Lyon and the Lyon Trust also filed timely notices of appeal from the judgment in the
ancillary hearing. Both subsequently dismissed their appeals in connection with Dale Lyon’s
guilty plea in the United States District Court for the Southern District of Florida, in which he
admitted obstructing justice and committing perjury in the ancillary hearing. As a result, the
Government acquired their remaining two-thirds interest in LCP, Ltd. and Lyon was sentenced
to three months’ imprisonment and a $20,000 fine. United States v. Lyon, No. 91-06192 (S.D.
25
were consolidated with the appeal of Benjamin Kramer’s and Michael Gilbert’s
convictions.40 Both Benjamin Kramer and Michael Gilbert appealed their RICO
and Travel Act convictions; Michael, alone, contested the forfeiture judgment. See
Kramer, 73 F.3d at 1070.41
F.
On appeal, we affirmed Benjamin Kramer’s convictions. Kramer, 73 F.3d at1070 n.1. As for Michael Gilbert, we affirmed his RICO and Travel Act
convictions, reversed his money laundering conviction, id. at 1072-73, and set
aside the forfeiture order against him. Id. at 1075-76. With respect to the order
forfeiting Michael Gilbert’s interest in the Club, we reasoned that:
Property forfeitable in a RICO proceeding is limited to that which the
defendant obtains directly or indirectly as a result of the racketeering
activity. See 18 U.S.C. § 1963(a)(3). The only acts of racketeering
which were both charged by the government and found by the jury to
have been committed by Gilbert occurred after he had obtained his
Fla. June 30, 1993).
40
For simplicity, we refer to these consolidated appeals as “the 1996 appeal.”
41
Benjamin Kramer was sentenced on August 29, 1990 to a forty-five year jail term and
ordered to pay a fine of $460,000. Jack Kramer was sentenced on August 29, 1990 to nineteen
years in prison and ordered to pay a $200,000 fine. Michael Gilbert was sentenced on August
28, 1990 to four years in prison and was ordered to pay a $350,000 fine. None of the three
defendants was ordered, as part of his sentence, to forfeit any property to the Government. We
discuss in Part IV.D., infra, the ramifications of the district court’s failure to order forfeiture as
part of the final judgment.
26
interest in the [Club]. Property acquired before a defendant commits
an act of racketeering cannot be said to have been derived from it. As
such, the forfeiture of Michael Gilbert’s interest in the [Club] must be
set aside.
Id. at 1076. Consequently, we concluded further in a footnote that:
Because we hold that Michael Gilbert’s interest in the [Club] is not
subject to forfeiture, neither are the interests of Karen Gilbert and [the
Trust]. And, orders restraining Michael Gilbert, Karen Gilbert or the
[Trust] from the use and enjoyment of their interest in the [Club],
including profits, are to be, for them, set aside also.
Because the government, as we understand it, still does have
some interest in the [Club] due to other forfeitures, we anticipate the
district court, will, in the light of the differing ownership interests,
need to hold a hearing or hearings and to issue additional orders about
the [Club]’s future operations upon the district court’s receiving of the
mandate from this court.
Id. at 1076 n.23.
After we handed down our decision on January 16, 1996, the Government
sought rehearing and modification on the issue of resentencing, arguing that the
district court should be allowed to resentence Michael Gilbert since a valuable
property interest was returned to him.42 Rehearing was denied in July, and our
mandate issued on July 18, 1996. The mandate stated, “it is now hereby ordered
and adjudged by this Court that the judgments and convictions of the District Court
42
The Government took its cue from a footnote in the district court’s Amended Final
Order of Forfeiture following the ancillary hearing in which the court stated that, in light of the
evidence presented at the hearing (which never surfaced during the criminal trial), it would
welcome an opportunity to increase Michael Gilbert’s sentence. See Kramer, 807 F. Supp. at741 n.30.
27
in these causes be and the same hereby AFFIRMED except as to Gilbert’s
conviction for money laundering and the forfeiture judgment which are
REVERSED.”
Back in the district court, the Gilberts moved for an Order on the Mandate.
Not to be outdone, the Government moved the district court to enter a protective
order “maintaining the status quo of the Gilberts’ alleged interests in the [Club].”
The Government’s motion requested that the district court “enter an order directing
that the defendant Michael S. Gilbert be required to file a petition pursuant to 18
U.S.C. § 1963(l).” In other words, the Government wanted Michael Gilbert to
claim a third-party interest in Kramer’s forfeited property, just as the other non-
defendants had done in the ancillary proceedings. In support of its motion, the
Government argued that Michael Gilbert “should be viewed . . . in the same way as
other alleged ‘owners’ of an interest in the [Club],” for example, Pierson and
Coyne, who settled with the Government prior to the ancillary hearing, or Lyon,
who participated in the ancillary hearing and was denied one-third of his LCP, Ltd.
interest. The Government further argued that “to permit defendant Michael S.
Gilbert to forgo having to do that which Lyon, Coyne and Pierson were required to
do would be to permit Gilbert to forgo having to establish his alleged legitimate
28
ownership interest, despite being the only LCP partner to be a convicted RICO
defendant.”
Under the Government’s reading of our 1996 decision setting aside Michael
Gilbert’s forfeiture verdict, we resolved only that Michael Gilbert’s interest in the
Club was improperly forfeited because it was not derived, directly or indirectly,
from his racketeering activity. The Government notes in its brief that our “opinion
[did] not address the issue of whether the Gilberts are entitled to their interest in
the [Club] pursuant to 18 U.S.C. §1963(l) as either superior title holders . . . or
bona fide purchasers for value without reasonable cause to believe the property
was subject to forfeiture.” Thus, the Government maintains that since Michael
Gilbert’s interest in LCP, Ltd. was acquired after the violations that gave rise to
Benjamin Kramer’s forfeiture, and since our 1996 decision left intact the verdict of
forfeiture reaching Benjamin Kramer’s interest in the Club, the Gilberts were
subsequent transferees under 18 U.S.C. § 1963(c).43 As such, the Government
43
Section 1963(c) reads:
All right, title, and interest in property described in [the RICO statute] vests in the
United States upon the commission of the act giving rise to forfeiture under this
section. Any such property that is subsequently transferred to a person other than
the defendant may be the subject of a special verdict of forfeiture and thereafter
shall be ordered forfeited to the United States, unless the transferee establishes in
a hearing pursuant to subsection (l) that he is a bona fide purchaser for value of
such property who at the time of purchase was reasonably without cause to
believe that the property was subject to forfeiture under this section.
18 U.S.C. § 1963(c); see also supra note 38.
29
contends that the Gilberts should be required to show that they acquired their
interests without cause to believe that it was subject to forfeiture.
Following a hearing, the district court denied the Government’s request for a
protective order and contemporaneously entered an order on the mandate. The
district court reasoned that the Government’s argument, “however sound and well-
reasoned it might be . . . could have been pursued much earlier in these
proceedings. The government could have raised this during the ancillary
proceedings, the appeal and the petition for rehearing or have sought certiorari in
the Supreme Court, but did not. As such, the government has waived this issue.
United States v. Thompson, 710 F.2d 1500 (11th Cir. 1983).” The Government
filed a motion for reconsideration, which the district court denied on March 10,
1997. The Government then took this appeal.44
44
During the pendency of this appeal, the district court authorized the United States to
dispose of its interest in the Club. Julie Coyne, who had settled with the Government rather than
take part in the ancillary proceedings, opposed the sale, claiming that she was entitled to acquire
the Government’s interest in LCP (which at that time represented a 10% general partnership
interest and a 36.45% limited partnership interest) under a right of first refusal written into the
LCP general partnership agreement. The district court denied her claim, finding that since she
had acted in concert with Benjamin Kramer, she was statutorily barred from purchasing the
Government’s interest. See United States v. Kramer, 957 F. Supp. 223, 228 (S.D. Fla. 1997)
(“Section (f) of 18 U.S.C. 1963 does not require that Julie Coyne be indicted and found guilty
before she can be barred from purchasing the government’s interest. The statute requires that she
have ‘acted in concert with’ defendants. That Julie Coyne did . . . .”). Coyne appealed that
decision to this court (Case Nos. 97-4475, 97-5173, 97-5174) and we heard oral argument on
October 8, 1998. While a decision in Coyne’s case was still pending, Coyne consented to the
Government selling its LCP interest to a different buyer. The Government and Coyne then
agreed that the right of first refusal issue was moot. In their Joint Motion to Dismiss Appeal, the
30
II.
A.
As a threshold matter, we must address the Gilberts’ challenge that we lack
jurisdiction to hear this appeal. The Government maintains that 28 U.S.C. § 129145is a proper basis for our jurisdiction because the district court’s denial of the
Government’s request for a protective order conclusively resolves conflicting
ownership interests in the Club. As such, the Government posits that its appeal is
from a final judgment. The Gilberts, on the other hand, contend that section 1291
is not a proper basis for the Government’s appeal because section 1291 does not
authorize the United States to appeal final orders in criminal cases. See United
Government conceded that “the United States no longer owns any interest in LCP or the Bell
Garden’s Bicycle Club.” We granted dismissal in that case, thus raising the possibility that the
present case was subsequently rendered moot by the Government’s total divestiture. Upon
request by this court, the Government assuaged our concern – the Government had curiously
agreed “as part of the sale of its forfeited interest . . . to sell the Michael Gilbert, Karen Gilbert,
and Trust, interests if and when those interests are finally forfeited to and owned by the United
States.” (We say “curiously” in light of the fact that the Government informs us that the Gilbert
family limited partnership interests are currently valued at over ten million dollars. The legal
card club business in California must indeed be a profitable business for a buyer to agree to a
sale that might prove $10 million short.)
45
28 U.S.C. § 1291 provides us with jurisdiction over “appeals from all final decisions of
the district courts of the United States.” A final decision is one that “ ‘ends the litigation on the
merits and leaves nothing for the court to do but execute the judgment.’ ” Pitney Bowes, Inc. v.
Mestre, 701 F.2d 1365, 1368 (11th Cir. 1983) (quoting Catlin v. United States, 324 U.S. 229,
233, 65 S. Ct. 631, 633, 89 L. Ed. 911 (1945)).
31
States v. Horak, 833 F.2d 1235, 1247 n.10 (7th Cir. 1987). The Government side-
steps the fact that section 1291 is inapplicable to government appeals from criminal
cases by asserting that the Government is “appealing the district court’s ruling in
the ancillary forfeiture proceeding, and not the criminal proceeding against Gilbert
himself.” The Government’s brief also emphasizes that its appeal relates to the
district court’s order denying the Government’s request “to require [the Gilberts
and the Trust] to file third-party petitions in the ancillary proceeding relating to the
criminal forfeiture of [Benjamin] Kramer’s interest” in the Club. In other words,
the Government seeks to use the 1990-91 ancillary proceeding regarding Benjamin
Kramer’s forfeited property as the basis for its requested protective order.
1.
The question which confronts us at this stage is whether a third-party
proceeding ancillary to a criminal forfeiture prosecution is a criminal or civil
proceeding for the purposes of a government appeal. If a section 1963(l) ancillary
proceeding is civil in nature, as the Government contends, then our jurisdiction
over the appeal would be proper; but if the ancillary proceeding is criminal in
nature, the Government would lack statutory authorization to bring this appeal
under section 1291. See Horak, 833 F.2d at 1247 n.10 (“Nothing in section 1291
32
grants the executive the power to appeal all (or for that matter any) final orders in
criminal cases.”). Surprisingly, no other circuit has addressed this question
directly.46
In United States v. Douglas, 55 F.3d 584 (11th Cir. 1995), we held that an
ancillary proceeding pursuant to 21 U.S.C. § 853(n)47 was “a civil action” for the
purpose of allowing a third party to recover attorneys’ fee awards against the
United States under the Equal Access to Justice Act. Douglas involved a third-
party claimant who filed a petition opposing criminal forfeiture of certain property
46
But cf. United States v. Douglas, 55 F.3d 584, 588 (11th Cir. 1995) (holding that a
third-party claim in a proceeding ancillary to criminal forfeiture is to be considered a civil action
for purposes of permitting an award of attorney’s fees under the Equal Access to Justice Act);
United States v. Alcaraz-Garcia, 79 F.3d 769, 772 n.4 (9th Cir. 1996) (stating that an appeal
from the denial of a third-party petition under 21 U.S.C. §853(n) is civil in nature for purposes of
determining the timeliness of filing the appeal under Fed. R. App. P. 4.); United States v. Lavin,
942 F.2d 177, 181-82 (3d Cir. 1991) (same); but see United States v. BCCI Holdings, 980 F.
Supp. 529, 533-534 (D.D.C. 1997) (holding that for the purposes of a Kastigar hearing, “RICO
third–party criminal forfeiture proceedings under § 1963(l) are ‘criminal cases’ within the
meaning of 18 U.S.C. § 6002”). We note in passing that our independent research uncovered
only one case where the government appealed an adverse ruling in an ancillary hearing. The
Fourth Circuit Court, unfortunately, did not address the basis for its appellate jurisdiction. See
United States v. Reckmeyer, 836 F.2d 200 (4th Cir. 1987).
47
21 U.S.C. § 853 deals with criminal forfeiture in narcotics cases brought under the
Continuing Criminal Enterprise statute, 21 U.S.C. § 848 et seq. (1994). Section 853(n) is
“substantially identical” to section 1963(l). United States v. Ripinsky, 20 F.3d 359, 362 n.3 (9th
Cir. 1994). Cases applying one of these analogous statutes have used section 853(n) and section
1963(l) cases interchangeably. See e.g., United States v. Bissell, 866 F.2d 1343, 1348 n.3 (11th
Cir.1989). The legislative history of RICO has been used to interpret congressional intent in
section 853(n) cases because Congress adopted section 1963(l)’s language when it crafted
section 853(n). See Douglas, 55 F.3d at 586 n.9; United States v. Lavin, 942 F.2d 177, 185 n.9
(3d Cir. 1991).
33
under a provision of the statute identical to section 1963(l). Id. at 586 & n.9. After
prevailing on a summary judgment motion and thereby successfully establishing
his claim to the forfeited property, the third-party moved for attorney’s fees
pursuant to the EAJA. Id. at 586. Finding that “the government apparently made
no investigation into factual background prior to seeking forfeiture,” the district
court awarded the third-party approximately $21,000 in attorney’s fees. Id.
(internal quotation omitted).
On appeal, the government argued that a third-party proceeding ancillary to
a criminal forfeiture prosecution was not a civil case and therefore the assessment
of fees against the government was in error. The Douglas court’s section 853(n)
analysis applies just as easily to section 1963(l). See United States v. Bissell, 866
F.2d 1343, 1348 n.3 (11th Cir. 1989) (“[O]ur discussion and holdings apply
equally to the forfeiture provisions in 21 U.S.C. § 853 as to those found in 18
U.S.C. § 1963.”). The Douglas court first looked at nature of a section 853(n)
proceeding and noted that “[o]nce a criminal forfeiture prosecution has been filed,
third parties are expressly barred by 21 U.S.C. § 853(k)(2) from ‘commenc[ing] an
action at law or equity against the United States concerning the validity of [their]
interest in the property’ except ‘as provided in [section 853(n)].’” Douglas, 55
F.3d at 586 (alterations and emphasis in original); see also 18 U.S.C. § 1963(i)(2)
34
(containing language analogous to § 853(k)(2)). From this provision, the Douglas
court gleaned that a section 853(n) suit was meant to operate as a “substitute for
separate civil litigation against the government.” Id. (emphasis in original). In a
footnote, the court further buttressed its conclusion that “Congress considered this
ancillary proceeding to be essentially civil” by turning to the legislative history of
section 1963(l). Id. at n.9. There the court found that Congress intended that third-
party petitions ancillary to a criminal forfeiture take the place of civil cases, and
that such a procedure would enable innocent parties to adjudicate their property
interests swiftly instead of having to file separate civil suits.48 Id. We find that the
Douglas court’s analysis applies beyond the mere confines of determining whether
ancillary proceedings are “civil actions” within the meaning of the EAJA. For the
same reasons expressed in Douglas, we conclude that a third-party petition filed
under section 1963(l) is civil in nature even though it is ancillary to a criminal
forfeiture trial. Accordingly, we believe that the Government can properly appeal
48
[O]nce the indictment or information is filed, a third party is not to
commence a civil suit against the United States; instead the third
party should avail himself of the ancillary hearing procedure . . . .
This provision assures a more orderly disposition of both the
criminal case and third party claims. Indeed, it is anticipated that
the new hearing procedure should provide for more expedited
consideration of third party claims than would the filing of
separate civil suits.
H.R. Rep. No. 98-1030, at 206-07 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3389-90
35
the district court’s denial of its motion for a protective order relating to the
Government’s interest in Benjamin Kramer’s forfeited property.
2.
While we agree with the Government that section 1963(l) ancillary
proceedings should be considered civil proceedings for the purposes of appellate
review, we disagree that section 1291 is a proper basis for our jurisdiction in the
instant appeal. The Government’s motion for a “protective order” requested that
the district court: (1) “enter an order directing that the defendant Michael S. Gilbert
be required to file a petition pursuant to 18 U.S.C. § 1963(l) within thirty (30)
days” and (2) “enter a Protective Order maintaining the status quo of the Gilberts’
alleged interests in the [Club] until” the district court resolved the issue in (1)
above. While the Government’s motion is couched as request for a protective
order, this designation is nothing more than smoke and mirrors. In effect, the
Government has taken a request for an injunction – ordering Michael Gilbert to file
a third-party petition pursuant to section 1963(l) – and cleverly dressed it up to
look like a request for a protective order.49
49
An injunction ordering a party to “take action,” such as file a third-party claim, is
properly labeled a mandatory injunction. See Meghrig v. KFC Western, Inc., 516 U.S. 479, 484
116 S. Ct. 1251, 1254, 134 L. Ed.2d 121 (1996); see also Tom Doherty Assoc. v. Saban Entm’t,
36
It is clear from the language of the Government’s motion that the “status
quo” of the Gilberts’ property stands or falls upon the district court’s decision to
grant (or deny) the injunction. We conclude, therefore, that the Government’s
motion should be properly treated as a request for an injunction. Cf. Chatman v.
Spillers, 44 F.3d 923, 924 (11th Cir. 1995) (finding jurisdiction under 28 U.S.C.
§1292(a)(1) because plaintiffs’ request for an order directing the defendants to call
special elections could be characterized appropriately as an injunction). Because
we believe that the district court’s refusal to grant the Government’s request is
more appropriately labeled a denial of an injunction, we find that 28 U.S.C. §
1292(a)(1)50 is the appropriate jurisdictional basis for our review in this case. The
Government’s misidentification of the proper jurisdictional basis, however, is not
fatal to its appeal. Spartacus Inc. v. Borough of McKees Rocks, 694 F.2d 947, 949
n.4 (3d Cir. 1982) (reviewing the merits of the action even though both the
appellant and appellee incorrectly relied on section 1291 for appellate jurisdiction
Inc., 60 F.3d 27, 34 (2d Cir.1995) (“A mandatory injunction, in contrast [to a prohibitory
injunction], is said to alter the status quo by commanding some positive act.”). The most
common type of injunctions “restrain” a party from doing something and such injunctions are
properly labeled prohibitory injunction. Id.50
Section 1292(a)(1) authorizes appellate jurisdiction of “[i]nterlocutory orders of the
district courts of the United States . . . granting, continuing, modifying, refusing or dissolving
injunctions.” 28 U.S.C. § 1292(a)(1) (1994).
37
when in fact section 1292(a)(1) was proper). Having assured ourselves that this
appeal is properly before us, we now proceed to the merits of the Government’s
argument.
B.
A mixed standard of review applies when a district court grants or denies an
injunction. We review the district court’s decision to grant or deny an injunction
for clear abuse of discretion, United States v. Bd. of Educ. of Greene County,
Mississippi, 332 F.2d 40, 45-46 (5th Cir. 1964), but underlying questions of law
are reviewed de novo. United States v. Pruitt, 174 F.3d 1215, 1219 (11th Cir.
1999) (“ ‘A district court by definition abuses its discretion when it makes an error
of law.’ ”) (quoting Koon v. United States, 518 U.S. 81, 100, 116 S. Ct. 2035, 135
L. Ed. 2d 392 (1996)). The Government’s position assumes that the district court
has the power to enter an injunction requiring the Gilberts and the Trust to file
third-party petitions in the ancillary proceeding relating to Kramer’s forfeited
property. Since this assumption is a purely legal one, we review it de novo.
III.
A.
38
The Government must demonstrate a substantive or procedural right before
it may obtain an injunctive remedy. Thus, we must look to RICO’s statutory
forfeiture scheme to determine whether it grants the Government a right to force
third-parties to file petitions in a section 1963(l) ancillary proceeding.51
1.
The RICO statute, introduced into law by the Organized Crime Control Act
of 1970, “was intended to provide new weapons of unprecedented scope for an
assault upon organized crime and its economic roots” by providing “enhanced
sanctions and new remedies to deal with the unlawful activities of those engaged in
organized crime.” Russello v. United States, 464 U.S. 16, 26-27, 104 S. Ct. 296,
78 L. Ed. 2d 17 (1983) (citing Pub. L. No. 91-452, 84 Stat. 922, 923 (1970))
51
The Government’s request is apparently an unprecedented move; our independent
research has uncovered no case in which the Government has attempted to obtain such an
injunction. The Gilberts and the Trust completely fail to question the propriety of the
Government’s motion, arguing instead that the Government’s request is barred by the law of the
case doctrine or, alternatively, that we lack jurisdiction to hear the Government’s appeal (see
supra Part II.A.).
The law of the case doctrine dictates that “both the district court and the court of appeals
generally are bound by findings of fact and conclusions of law made by the court of appeals in a
prior appeal of the same case.” United States v. Robinson, 690 F.2d 869, 872 (11th Cir. 1982).
The law of the case doctrine does not apply in this case because the issue in the 1996 appeal was
whether Michael Gilbert’s interest in the Club was properly forfeited under the Government’s
theory at trial, i.e., that his interest was derived from his own racketeering activity. The issue in
this appeal, however, is whether the Government can force a third-party subsequent transferee,
as defined in 18 U.S.C. § 1963(c), to file a section 1963(l) petition.
39
(quotations omitted). One such weapon in the RICO arsenal was the forfeiture
scheme, which sought to strike at the heart of an illegal enterprise by confiscating
tainted property and proceeds in hopes of putting the criminal enterprise out of
business. See United States v. Angiulo, 897 F.2d 1169, 1213 (1st Cir. 1990). This
weapon, however, has often left third-party property holders feeling particularly
vulnerable when, for instance, “their property appears to be the defendant’s and
the defendant is ordered to forfeit that property to the Government.” See United
States v. Schwimmer, 968 F.2d 1570, 1573 (2d Cir. 1992).
Surprisingly, from RICO’s enactment in 1970 until 1984, RICO’s forfeiture
provisions contained no procedure by which a third-party property holder could
adjudicate his claim to forfeited property. Instead, an innocent third-party who
claimed an interest in forfeited property could only petition the Attorney General,
who had been exclusively charged with making “due provision for the rights of
innocent persons.” 18 U.S.C. § 1963(c) (1984), amended by Pub. L. 98-473
(1984). Compounding the problem, third-parties who were dissatisfied with the
Attorney General’s final decision regarding their ownership claim were unable to
obtain judicial review of the Attorney General’s decision. See S. Rep. No. 98-225,
at 209 (1990), reprinted in 1984 U.S.C.C.A.N. 3182, 3392. Fourteen years after
RICO’s enactment, Congress recognized the inequity inherent in such a procedure
40
and amended the statute by enacting the Comprehensive Crime Control Act, Pub.
L. No. 98-473, 98 Stat. 1837. See id. at 3390-91. The amendment set up an
orderly procedure whereby third-parties whose property interests had been
criminally forfeited could challenge the validity of the forfeiture order and
establish their legitimate ownership interests in the district court.
Under current RICO forfeiture provisions, third-parties must wait for a final
order of forfeiture in the criminal trial before they can “hale the government into
[court]” to adjudicate their interests in forfeited property. United States v. Kramer,
912 F.2d 1257, 1261 (11th Cir. 1990); see also 18 U.S.C. § 1963(i). The order of
forfeiture is a required element of sentencing for criminal RICO violations and is
entered as part of the final judgment. 18 U.S.C. § 3554; 18 U.S.C. § 1963(e); Fed.
R. Crim. P. 32(d)(2); United States v. L’Hoste, 609 F.2d 796, 809-13 (5th Cir.
1980)52 (holding that forfeiture is a mandatory element of sentencing for a violation
of 18 U.S.C. § 1962); United States v. Derman, 211 F.3d 175, 182 n.9 (1st Cir.
2000) (“[T]he forfeiture order entered at sentencing is called ‘final order of
forfeiture’ and . . . is appealable.”). Once an order of forfeiture has been handed
down (as part of the final judgment), the court, pursuant to Fed. R. Crim. P.
52
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
October 1, 1981.
41
32(d)(2), may authorize the Attorney General to “seize the property subject to
forfeiture” and begin carrying out “statutory requirements pertaining to ancillary
hearings and the rights of third parties.” Fed. R. Crim. P. 32(d)(2) (1996).53 One
such statutory requirement is that the government “publish notice of the order and .
. . . to the extent practicable, provide direct written notice to any person known to
have alleged an interest in the property.” 18 U.S.C. §1963(l)(1). The government’s
obligation to give constructive notice to all potential third-parties, and preferably
direct notice to known third parties with an interest in the forfeited property, is a
vital requirement of RICO’s forfeiture provisions since the property rights of third-
parties who do not file petitions in the ancillary proceeding are automatically
extinguished. See 18 U.S.C. § 1963(l)(7).
Next, the statute defines the class of people who are entitled to challenge the
order of forfeiture and sets forth the time limits applicable to such challenges:
Any person other than the defendant, asserting a legal interest in
property which has been ordered forfeited to the United States
pursuant to this section may, within thirty days of the final publication
of notice or his receipt of notice under paragraph (1), whichever is
earlier, petition the court for a hearing to adjudicate the validity of his
53
Before its amendment in 1996, the relevant provision of Rule 32 read:
(2) Criminal Forfeiture. When a verdict contains a finding of property subject to
a criminal forfeiture, the judgment of criminal forfeiture shall authorize the
Attorney General to seize the interest or property subject to forfeiture, fixing such
terms and conditions as the court shall deem proper.
Fed. R. Crim. P. 32(b)(2) (1990) (current version at Fed. R. Crim. P. 32(d)(2)).
42
alleged interest in the property. The hearing shall be held before the
court alone, without a jury.
18 U.S.C. § 1963(l )(2). The filing of third-party claims, therefore, is reserved to
persons other than the defendant54 who claim to have a “legal interest” in the
forfeited property. Additionally, third-parties must file their petitions within thirty
days from receipt or final publication of notice, or lose the right to establish their
interest in the forfeited property. By specifically barring third-parties from
intervening in the criminal trial, 18 U.S.C. § 1963(k), it is clear that Congress
intended section 1963(l) proceedings to provide the exclusive means for third-
parties to assert their claims to forfeited property. Cf. United States v. Phillips, 185
F.3d 183, 186 (4th Cir. 1999) (applying analogous provisions of 21 U.S.C. §
853(n)).
Section 1963(l) also limits the grounds upon which a third-party petitioner
may rely to establish his interest in the property. To establish his legitimate
entitlement to the forfeited property, the petitioner must show that (1) title to the
54
Michael Gilbert contends that he cannot be made to file a third-party petition since the
statute applies to “[a]ny person other than the defendant.” 18 U.S.C. § 1963(l)(2). He argues that
since he was a defendant in the underlying RICO prosecution, he is statutorily barred from filing
a third-party petition. By including this provision in § 1963(l)(2), Congress undoubtedly sought
to prevent the defendant whose property had been forfeited from circumventing the forfeiture
order and litigating anew his entitlement to the property. With respect to Benjamin Kramer’s
forfeited property, Michael Gilbert is properly viewed as a third-party subsequent transferee
under § 1963(c), rather than a defendant as the term is used in the statute.
43
property was vested in him rather than the defendant at the time of the act which
made the property subject to forfeiture; (2) his title to the property was superior to
the title held by the defendant at the time of the act which made the property
subject to forfeiture; or (3) that he purchased his interest without reasonable cause
to know that the property was subject to forfeiture. See 18 U.S.C. 1963(l)(6)(A) -
(B) (reprinted in full supra, n.30). By successfully establishing one of these three
grounds, the petitioner defeats the government’s entitlement under the forfeiture
order. See 18 U.S.C. § 1963(l)(6) (“[T]he court shall amend the order of forfeiture
in accordance with its determination.”) (emphasis added). Not to be overlooked,
however, is that the third-party petitioner, and not the government, bears the
burden of proving one of these limited grounds by a preponderance of the
evidence. Congress chose to place the burden of proof on the third-party during
the ancillary proceeding, since the government would necessarily have carried its
burden of proving that the defendant’s interest in the property was subject to
forfeiture during the criminal trial. See S. Rep. No. 98-225, at 209 (1990),
reprinted in 1984 U.S.C.C.A.N. 3182, 3392. Finally, section 1963(l) declares that
“[f]ollowing the court’s disposition of all petitions filed under this subsection, or if
no such petitions are filed following the expiration of the period provided in
paragraph (2) for the filing of such petitions, the United States shall have clear title
44
to property that is the subject of the order of forfeiture and may warrant good title
to any subsequent purchaser or transferee.” 18 U.S.C. § 1963(l)(7).
As the foregoing reveals, a section 1963(l) ancillary proceeding is essentially
a quiet title proceeding. First, the jury’s special verdict of forfeiture establishes the
extent of the defendant’s interest in a certain forfeitable asset. Next, the forfeiture
order, in effect, puts the government in the defendant’s shoes and the government
succeeds to whatever interest, if any, that defendant had in the property. The
section 1963(l) ancillary proceeding then enables certain third-parties to file claims
in order to establish their interest in the defendant’s (now the government’s)
property. If one or more of the third-party claims is successful, the court releases
those interests and amends its order of forfeiture accordingly. See 18 U.S.C. §
(l)(6).
The language of the statute makes clear that if a third-party does not file a
petition in the ancillary proceeding within thirty days of receipt or publication of
notice, his rights in the defendant’s forfeited property are automatically
extinguished and the government obtains “clear title to property that is the subject
of the order of forfeiture and may warrant good title to any subsequent purchaser
or transferee.” 18 U.S.C. § 1963(l)(7). By virtue of its forfeiture judgment and the
fact that the time for filing ancillary petitions has run or such proceedings have
45
been concluded, the government succeeds as against the world to the defendant’s
property. In other words, the government has effectively quieted its title to the
defendant’s property and owns it outright.
2.
Applying the section 1963(l) model to the instant case, we note initially that
the condition precedent to an ancillary proceeding – the entry of a final order of
forfeiture – has apparently not been met. In sentencing Benjamin Kramer on
August 29, 1990, the district court failed to enter a judgment of forfeiture as
required by 18 U.S.C. § 3554,55 18 U.S.C. § 1963(e),56 and Rule 32(b)57 of the
55
18 U.S.C. § 3554 provides that:
The court, in imposing a sentence on a defendant who has been found guilty of an
offense described in section 1962 of this title . . . shall order, in addition to the
sentence that is imposed pursuant to the provisions of section 3551, that the
defendant forfeit property to the United States in accordance with the provisions
of section 1963 of this title . . . .
56
18 U.S.C. § 1963(e) states, in pertinent part: “Upon conviction of a person under this
section, the court shall enter a judgment of forfeiture of the property to the United States and
shall also authorize the Attorney General to seize all property ordered forfeited upon such terms
and conditions as the court shall deem proper. . . .”
57
At the time of trial, Fed. R. Crim. P. 32(b) read:
(b) Judgment.
(1) In General. A judgment of conviction shall set forth the
plea, the verdict or findings, and the adjudication and sentence. . . .
(2) Criminal Forfeiture. When a verdict contains a finding
of property subject to a criminal forfeiture, the judgment of
criminal forfeiture shall authorize the Attorney General to seize the
interest or property subject to forfeiture, fixing such terms and
46
Federal Rules of Criminal Procedure. The order of forfeiture upon which the
parties rely – entered immediately following the jury verdicts on April 3, 1990 –
was not part of Kramer’s sentence, and therefore could have done nothing more
than temporarily restrain the property pending sentencing. That order was
superseded by the court’s final judgment on August 29, which made no mention of
forfeiture.
As noted supra in Part III.A.1., third-parties cannot petition the court to
adjudicate their interests in forfeited property until a final order of forfeiture has
been entered in the criminal case. If such an order was ever entered against
Benjamin Kramer, we are unable to locate it in the record. Rather, the final
judgment in the criminal case only sentenced Kramer to prison confinement and a
fine. This fact alone is sufficient to affirm the denial of the Government’s request,
because third-parties such as the Gilberts are not permitted to file section 1963(l)
petitions in the absence of a final order of forfeiture. Given the convoluted nature
of this case, however, and the fact that the parties have long relied on the existence
of a final order of forfeiture, we shall defer our consideration of the issue.58 For the
conditions as the court shall deem proper.
Fed. R. Crim. P. 32(b) (1990) (current version at Fed. R. Crim. P. 32(d)).
58
Because the omission of a final order of forfeiture has severe ramifications in any
criminal forfeiture proceeding, we discuss the omission in further detail in Part IV.D., infra.
47
moment, we will assume that a final order of forfeiture was entered, and turn to 18
U.S.C. § 1963(l) to determine whether the Government can force the Gilberts to
file petitions claiming an interest in Kramer’s forfeited property.
3.
“In determining whether to infer a private cause of action from a federal
statute, our focal point is Congress’ intent in enacting the statute.” Thompson v.
Thompson, 484 U.S. 174, 179, 108 S. Ct. 513, 516, 98 L. Ed. 2d 512 (1988). In
Cort v. Ash, 422 U.S. 66, 78, 95 S. Ct. 2080, 2088, 45 L. Ed. 2d 26 (1975), the
Supreme Court set out four factors as guides to discerning that intent: (1) whether
the plaintiff is one of the class for whose benefit the statute was enacted; (2)
whether there is any indication of legislative intent, explicit or implicit, either to
create or to deny a private remedy; (3) whether implying a private right of action is
consistent with the underlying purposes of the legislative scheme; and (4) whether
the cause of action is one traditionally relegated to state law, such that it would be
inappropriate for the court to infer a cause of action based solely on federal law.59
59
Since its decision in Cort, the Supreme Court has become more restrained in its
willingness to find an implied private right of action. See Touche Ross & Co. v. Redington, 442
U.S. 560, 578, 99 S. Ct. 2479, 2490, 61 L. Ed. 2d 82 (1979) (adopting a “stricter standard” of
“congressional intent”). Today, the Court requires some affirmative evidence of congressional
intent, in “the language and focus of the statute, its legislative history, and its purpose.” Touche
Ross, 442 U.S. at 575-76, 99 S. Ct. at 2489.
48
“The intent of Congress remains the ultimate issue . . . . ‘[U]nless this
congressional intent can be inferred from the language of the statute, the statutory
structure, or some other source, the essential predicate for implication of a private
remedy simply does not exist.’ ” Thompson, 484 U.S. at 179, 108 S. Ct. at 516(quoting Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 94, 101 S. Ct.
1571, 1582, 67 L. Ed. 2d 750 (1981)).
We need not consider all four factors of the Cort analysis, as our
consideration of the first two factors is dispositive. See Florida v. Seminole Tribe
of Florida, 181 F.3d 1237, 1247 (11th Cir. 1999) (“[W]hen an examination of one
or more of the Cort factors ‘unequivocally reveals congressional intent[,] there is
no need for us to trudge through all four of the factors.’”) (quoting Liberty Nat’l
Ins. Holding Co. v. Charter Co., 734 F.2d 545, 558 (11th Cir. 1984)) (alteration in
original)). Under Cort’s first factor, the language and legislative history of section
1963(l) demonstrate that the statute was designed to protect only the property
rights of innocent third-parties, not those of the government. Accordingly, it
appears under the second factor of the Cort analysis that Congress did not intend to
create the injunctive remedy sought by the Government in this case. Indeed, there
is no need for a proceeding in which the government may assert its claim to
forfeited property, as the statutory scheme outlined in section 1963(l) is self-
49
executing. That is, aside from providing the required notice, the government need
not take any affirmative action if third-parties neglect to file claims to forfeited
property. Even if a petition is filed, section 1963(l) places the burdens of
production and persuasion on the petitioner. 18 U.S.C. § 1963(l)(6). After the
ancillary proceedings have ended, or the time for filing petitions has run, the
government automatically succeeds to the remaining forfeited property by
operation of law.60 The government need not force third-party owners to appear in
court so that their interests may be extinguished; those who have notice but do not
appear lose their interests by default. At the end of the ancillary
proceedings, the court must amend its order of forfeiture to reflect any successful
third-party claims. 18 U.S.C. § 1963(l)(6). If none of the third-party claims was
successful, or if no petitions were filed during the statutory time period, the court
need not amend its order. The government may, however, request an order from
the court declaring that the government has met all of the statutory notice
requirements, that no meritorious third-party claims were filed, and that the
government has clear title to the forfeited property.
60
The “remaining forfeited property” will be that interest or property which was forfeited
in the court’s initial order of forfeiture and not successfully claimed by a third-party owner.
50
The structure of RICO’s criminal forfeiture scheme clearly indicates that
Congress did not expect the government to play an active role under section
1963(l). It is well settled that, absent compelling countervailing considerations or
an absurd result, we may not disregard the clear, mandatory statutory scheme
erected by Congress. Rubin v. United States, 449 U.S. 424, 430, 101 S. Ct. 698,
701, 66 L. Ed. 2d 633 (1981). Section 1963(l) was enacted to allow innocent third-
party owners to assert claims to forfeited property, not to assist the Government in
forcing those third-parties to do so. Implying such a private cause of action in
favor of the Government would directly contravene RICO’s statutory forfeiture
scheme, and the Government has presented us with no compelling countervailing
consideration that would justify such a decision. Thus, we hold that the
Government’s requested injunction is not statutorily authorized by section 1963(l).
B.
1.
As a general matter, our conclusion that section 1963(l) proceedings are self-
executing greatly benefits the Government. For instance, if a house, a car, or
shares of stock were forfeited to the Government because the defendant purchased
them with drug proceeds, the Government would automatically obtain clear title to
51
any of those assets if no third-party petitions were filed before the statutory
deadline. If there were any question about the propriety of the Government’s title,
the Government could simply move the court for an order declaring the status of its
interest based on the final order of forfeiture and the disposition of third-party
petitions. The question then arises: why would the Government ask a court to
force third-parties to file section 1963(l) petitions when, as a result of the third-
parties’ failure to file, the Government would obtain clear title to the property
automatically?
2.
As a result of our 1996 opinion setting aside the order of forfeiture against
Michael Gilbert,61 the Government is left with only that interest in property which
belonged to Benjamin Kramer at the time it became subject to forfeiture. The
problem, however, is that the exact nature of that interest is undetermined. In an
attempt to correct fundamental errors made during the criminal trial, the district
court modified the forfeiture verdict (returned on April 2) and initial order of
61
We set aside the forfeiture verdict against Michael Gilbert because, under a logical
reading of section 1963(a)(3), Michael Gilbert could not have obtained his LCP, Ltd. interest as
a result of his racketeering activity since the jury found him guilty of racketeering acts occurring
only after he acquired his interest. Kramer, 73 F.3d at 1076.
52
forfeiture (entered on April 3) after it heard evidence in the ancillary proceedings.62
The resulting Amended Final Order purported to forfeit Kramer’s interest in LCP,
Ltd., rather than the entire Bell Gardens Bicycle Club. The court made this change
despite the fact that LCP, Ltd. was not named in the indictment, verdict, or initial
order of forfeiture. The Government, believing that the court’s post-trial
amendment was valid, now claims title to Kramer’s interest in LCP, Ltd., rather
than the Club.
The dilemma presented by this purported change is that the Government
does not know the extent of Kramer’s interest – and, therefore, the extent of its
own interest – in LCP, Ltd. Because the jury was never instructed to determine
Kramer’s interest in the partnership, his interest could conceivably range anywhere
from .01 to 100 percent. Thus, what the Government has, at best, is an unspecified
interest in LCP, Ltd. The question now becomes: what can the Government do
with that unspecified interest?
What the Government presumably wants to do is sell its interest in LCP, Ltd.
This would not normally be a problem, as the time for filing third-party petitions
has long passed and title to the interest has vested in the Government by operation
62
For instance, the trial court presumably realized during the ancillary proceedings that a
Joint Venture, rather than any defendant in the case, owned the Bell Gardens Bicycle Club. See
infra, Part IV.B.
53
of law. See 18 U.S.C. § 1963(l)(7).63 In any other case, the Government would
simply present the final order of forfeiture to the general partners of LCP, Ltd. and
have the LCP, Ltd. Partnership Agreement amended to reflect the Government’s
ownership interest.64 Of course, if the partnership agreement were not amended, a
percentage of LCP, Ltd. would remain in the Gilberts’ names. A prospective
purchaser, aware of the 1996 decision in which we held that those ownership
interests did not derive from Michael Gilbert’s racketeering activity, would be
unsure about the source of the interests and would quickly conclude that he was
buying a lawsuit. Thus, the Government’s interest in LCP, Ltd. is of little, if any,
value until the Government obtains clear title to it.
The Government’s problem in this case is that the LCP, Ltd. Partnership
Agreement cannot be amended to reflect the Government’s ownership interest
63
Section 1963(l)(7) states:
Following the court’s disposition of all petitions filed under [section 1963(l)], or
if no such petitions are filed following the expiration of the period provided in
[section 1963(l)(2)] for the filing of such petitions, the United States shall have
clear title to property that is the subject of the order of forfeiture and may warrant
good title to any subsequent purchaser or transferee.
18 U.S.C. § 1963(l)(7) (1994).
64
The certificate of limited partnership would be properly amended by a general partner
filing a certificate of amendment in the office of, and on a form prescribed by, the California
Secretary of State. Ca. Corp. § 15622(a) (2000). If a general partner required to execute the
certificate of amendment fails to do so within a reasonable time, or refuses to do so, or if there is
any dispute concerning the filing of the certificate of amendment, any partner may petition the
superior court to direct the execution of the certificate. If the court determines that the certificate
should be filed, it shall order a party to file a certificate on the appropriate form prescribed by the
Secretary of State. Cal. Code § 15625(b) (2000).
54
because the Government has no evidence to establish what percentage of the
partnership it owns. It is hardly sufficient for the Government to allege that it
owns “some” of LCP, Ltd. The initial order of forfeiture contains no useful
information, as it does not even mention LCP, Ltd. Moreover, the name “Kramer”
is nowhere to be found on the LCP, Ltd. partnership documents, for the Kramers
were either silent partners in LCP, Ltd., or simply two of the Club’s illegitimate
creditors.
The jury was never asked to make sense of the crucial partner/creditor
distinction, or to delineate the extent of Kramer’s ownership interest in LCP, Ltd.
Instead, the court waited until the ancillary proceedings following the trial to
address the difficult factual questions of ownership and apportionment. At the
conclusion of those proceedings, the district court found that “the real owners of
the Bicycle Club were Ben Kramer, Randy Lanier, Tom, known as George Brock,
and . . . Gene Fisher. . . . The LCP partners and Gilberts, as well as [PPA] were just
‘straw persons’ for purposes of the licenses.” Kramer, 807 F. Supp. at 736. It
further found that “Ben Kramer held a one-third (1/3) ownership interest in LCP at
the time of the commission of the acts giving rise to the forfeitability of the
property.”65 Id. at 739.
65
With respect to Jack Kramer’s interest in the Club, the district court concluded that
“[c]learly Jack was not a partner in ownership.” Kramer, 807 F. Supp. at 729. This
55
The district court’s post-trial findings, however, cannot retroactively amend
the jury’s verdict. Federal Rule of Criminal Procedure 31(e) gives a defendant a
statutory right66 to have the amount of property subject to forfeiture determined by
a jury.67 Fed. R. Crim. P. 31(e); see also Libretti v. United States, 516 U.S. 29, 48-
49, 116 S. Ct. 356, 367-68, 133 L. Ed. 2d 271 (1995); United States v. Candelaria-
Silva, 166 F.3d 19, 43 (1st Cir. 1999). Had the Government targeted LCP, Ltd.
from the outset, Rule 31(e) would have required that the jury be instructed to
identify (1) the interest, if any, each defendant held in LCP, Ltd., and (2) how
much of each defendant’s interest was subject to forfeiture.68 Instead, the court
determination only serves to underscore the inadequacy of the special verdict forms, as it
impugns the jury’s finding that Jack Kramer did, in fact, own a forfeitable interest in the Club.
66
“ ‘The Federal Rules of Criminal Procedure have the force and effect of law. Just as a
statute, the requirements promulgated in these Rules must be obeyed.’ ” United States v. Cowan,
524 F.2d 504, 505 (5th Cir.1975) (quoting Dupoint v. United States, 388 F.2d 39, 44 (5th Cir.
1967)).
67
Rule 31(e) of the Federal Rules of Criminal Procedure provides that “[i]f the
indictment or the information alleges that an interest or property is subject to criminal forfeiture,
a special verdict shall be returned as to the extent of the interest or property subject to forfeiture,
if any.” Fed. R. Crim. P. 31(e); see also Fed. R. Crim. P. 7(c)(2) (“No judgment of forfeiture
may be entered in a criminal proceeding unless the indictment or the information shall allege the
extent of the interest or property subject to forfeiture.”). The Government in this case surely
knew about this requirement; the RICO manual for federal prosecutors instructs that “[s]pecial
verdict forms must be prepared so that the jury can make specific findings as to the extent of the
forfeiture. The special verdict form must clearly and precisely describe the interests whose
forfeitability the jury is considering.” Department of Justice, Criminal Division, Racketeer
Influenced and Corrupt Organizations (RICO): A Manual for Federal Prosecutors 113-14 (3d
rev. ed., Sep. 1990) (footnote omitted).
68
We note that this specificity requirement protects not only defendants, but also third-
parties with interests in the defendant’s forfeited property. If the verdict and subsequent order of
56
created its own “simplified special verdict forms,” which, like the indictment and
jury instructions, focused on the Bell Gardens Bicycle Club. The verdict forms
merely asked whether the Club “constituted or was derived from any proceeds
which [the defendant] obtained directly or indirectly from racketeering activity,”
and if so, “whether The Bell Gardens Bicycle Club [was] subject to forfeiture.”69
Since the verdict forms did not even suggest that LCP, Ltd. was an item of
forfeitable property, the jury never had occasion to consider the extent of any
defendant’s interest in the partnership.
Because the court’s “simplified” forms did not ask the jury to identify any
defendant’s interest in LCP, Ltd. or to determine whether that interest was subject
to forfeiture, those questions must remain unanswered. Absent a waiver by
defendants of their Rule 31(e) right to a jury determination of forfeiture, the court
has no authority to amend the jury’s verdict. See United States v. Bornfield, 145
F.3d 1123, 1138-39 (10th Cir. 1998) (holding that where a jury verdict was invalid
because it erroneously forfeited defendant’s business, rather than personal, bank
account, the trial court’s forfeiture order could not stand absent a waiver of a jury
forfeiture are vague, they greatly expand the universe of third-parties whose interests are in
jeopardy and who therefore require notice. The specificity requirement also fosters judicial
economy, as those who are unsure whether their interests are implicated may file petitions out of
an abundance of caution and burden the courts with unnecessary litigation.
69
The forms also asked whether the $280,000 deposited into defendant Melvyn Kessler’s
Operating and Trust Accounts, or any portion thereof, was subject to forfeiture.
57
trial on the issue of forfeiture). In short, then, the Government cannot know what
percentage of LCP, Ltd. it holds, because the jury never made that determination.
3.
Let us assume, arguendo, that the district court could retroactively correct
the forfeiture judgment against Benjamin Kramer, thereby giving the Government
title to a fixed percentage of LCP, Ltd. In such a case, the Government might
simply seek an order from the court declaring the status of its title, rather than a
section 1963(l) proceeding. To fashion such an order, the court would most likely
look to the findings it made during the ancillary proceedings to determine whether
the Gilberts’ interests were derived from Benjamin Kramer. If it found that they
were, the court would then decide, based on the same evidence, whether Michael
Gilbert et al. were nominee holders of Kramer’s interest, or whether their
ownership interests were otherwise tainted under section 1963(l)(6) because they
were knowingly derived from Kramer’s racketeering proceeds.70
70
Neither the Gilberts nor the Trust asserted an interest in Kramer’s forfeited property
during the ancillary proceedings. This was presumably because no one had yet alleged that they
were subsequent transferees of his interest. Additionally, because Michael Gilbert was still a
defendant in the case during those proceedings, he was precluded from claiming an interest in his
own forfeited property. See 18 U.S.C. § 1963(l)(2).
58
One problem with this approach, however, is that the district court’s prior
findings on the issue of ownership are in direct conflict. While the court found that
“of the defendants, only Ben Kramer and Michael Gilbert actually owned a
forfeitable interest in the Club,” 807 F. Supp. at 738 n.22 (emphasis added), it also
found that “the real owners of the Bicycle Club were Ben Kramer, Randy Lanier, .
. . George Brock, and . . . Gene Fisher,” and that “[t]he LCP partners and Gilberts .
. . were just ‘straw persons’ for purposes of the licenses,” id. at 736 (emphasis
added). As the trial court accurately noted, however, a person cannot “have a
vested interest in property if he is found to be acting as a nominee for persons
whose property is subject to forfeiture.”71 Id. at 738. Which is it, then? Did
Michael Gilbert own a forfeitable interest in the Club, or was he a nominee, or
“straw man,” holding Kramer’s LCP, Ltd. interest? Because these questions have
never been answered, it is unclear whether even the district court knows the origin
of the Gilbert interests.
The Government, therefore, seeks to use the section 1963(l) ancillary
proceeding as a quiet title suit, in which the Gilberts and the Trust would bear the
burden of proving the origin and legitimate ownership of their interests in LCP,
71
Nominee “connotes the delegation of authority to the nominee in a representative or
nominal capacity only, and does not connote the transfer or assignment to the nominee of any
property in, or ownership of, the rights of the person nominating him.” Braxton v. United States,
858 F.2d 650, 653 n.6 (11th Cir. 1988).
59
Ltd. 18 U.S.C. § 1963(l)(6) (stating that the petitioner must establish legitimate
ownership by a preponderance of the evidence). The district court foreshadowed
the result of such a proceeding in its Amended Final Order, in which it stated that
Michael Gilbert was “involved heavily, or knew or should have known of the illicit
nature of the operation,” Kramer, 807 F. Supp. at 736, and that Mrs. Gilbert “knew,
or at least should have known[,] of the tainted nature of her husband’s interest,” id.
at 741. Moreover, it found that “even if the trust was a bona fide purchaser for
value, . . . [the] co-trustee . . . obviously had strong cause to believe the Club was
funded, at least in part, by laundered drug money and [was] thus forfeitable.” Id. at
742. Since most of the heavy lifting has already been done, the hardest part of the
Government’s case is haling the Gilberts and the Trust into court. But, as we have
established, this it cannot do.
4.
In sum, the circumstances make clear why the Government would like the
Gilberts to file section 1963(l) petitions in this case. Waiting out the clock could
only finalize the Government’s title to an unspecified interest in LCP, Ltd., an
interest which has practically no market value. The Government now seeks to
institute proceedings that it believes will guarantee a judgment for a specified
60
amount of LCP, Ltd. – a judgment it can “take to the bank.” Additionally, a
section 1963(l) proceeding would determine the origin of the Gilbert interests and
finally allow the Government to clear the chain of title and sell its interest.
While the Government’s approach is an innovative one, it cannot succeed.
For the reasons stated supra, Part III.A., section 1963(l) does not provide the
Government an implied cause of action to force the Gilberts to file section 1963(l)
petitions. Thus, the Government’s only recourse in its attempt to recapture those
interests that the Gilberts and the Trust may have derived from Benjamin Kramer is
to institute a separate quiet title action in California.72
IV.
72
A quiet title action is usually defined as a “proceeding to establish the plaintiff’s title
to land by bringing into court an adverse claimant and there compelling him either to establish
his claim or be forever estopped from asserting it.” Black's Law Dictionary 1249 (6th ed. 1990)
(emphasis added). Under current California law, however, “title to both real and personal
property may be litigated in a quiet title action.” Lopes v. Lopes, 199 Cal. Rptr. 425, 429 (Cal.
App. 1984); see also Cal. Civ. Proc. Code § 760.020 (stating that “[a]n action may be brought
under [the quiet title] chapter to establish title against adverse claims to real or personal property
or any interest therein”). California law holds that “a partner’s interest in partnership property of
whatever character (realty or personalty) is an interest in personalty for all purposes.”
Tinseltown Video, Inc. v. Transportation Ins. Co., 71 Cal. Rptr. 371, 373 (Cal. App. 1998).
Notably, the Government will bear the burden in the quiet title proceeding of proving that
it has a superior claim to the property at issue. See Cal. Code § 637 (“The things which a person
possesses are presumed to be owned by him.”); Davis v. Crump 123 P. 294, 296-97 (Cal. 1912)
(“Proof of possession makes a prima facie case of ownership as against one not shown to have
had any title or possession.”).
61
Even if section 1963(l) could be interpreted to provide an implied cause of
action in favor of the Government, the court could not grant the requested
injunction in this case because the Government holds nothing for the Gilberts to
claim. The Government’s argument on appeal is based entirely on the assumption
that it holds a valid order of forfeiture against Benjamin Kramer. This assumption,
however, is wrong for several reasons. First, the jury’s verdict and the district
court’s subsequent order of forfeiture constituted an improper attempt to effect an
in rem, rather than an in personam, forfeiture. The former type of forfeiture is a
remedial action against property, whereas the latter is a punitive action against a
defendant. Second, the evidence at trial conclusively established that Benjamin
Kramer did not own what the jury attempted to forfeit by its verdict – the Bell
Gardens Bicycle Club. Kramer actually stood once removed from the real estate –
owning only an interest in a limited partnership (LCP, Ltd.) that owned part of the
Club through its joint venture agreement with PPA. Third, even if the jury’s
verdict were construed to have forfeited Kramer’s interest in LCP, Ltd. rather than
the Club itself, the verdict was deficient insofar as it failed to specify the
percentage of Kramer’s ownership interest in LCP, Ltd. Without a judgment for a
specified interest, the Government cannot establish how much of the defendant’s
property was forfeited. Fourth, even if the forfeiture verdict had been in flawless
62
form – targeting Kramer’s interest in LCP, Ltd. and specifying his percentage of
ownership – the district court neither entered the verdict nor ordered forfeiture as
part of Kramer’s sentence. In other words, the district court allowed the forfeiture
verdict to vanish, without any force or effect. As a result, the event triggering
ancillary proceedings and seizure of the property never occurred. Thus, the district
court properly denied the Government’s request for a mandatory injunction. The
Gilberts cannot be forced to claim an interest in property the Government does not
have, or be forced to file petitions in a proceeding not authorized by law.
A.
1.
The distinction between in rem forfeiture (civil) and in personam forfeiture
(criminal) is of great import in this case, and has an illustrative history:
The law of forfeiture dates back to the Old Testament.
According to Exodus 21:28 (King James), “If an ox gore a man or a
woman, and they die: then the ox shall be surely stoned, and his flesh
shall not be eaten.” A suggested basis for the text is that if the ox
offended the heirarchical [sic] order, appeasement of God, the
sovereign, required reparation which could only be attained by the ox
forfeiting its life. See Finkelstein, The Goring Ox: Some Historical
Perspectives on Deodands, Forfeitures, Wrongful Death and the
Western Notion of Sovereignty, 46 TEMP. L.Q. 169, 180 (1973). The
forfeiture doctrine continued into the common law of England where
the Crown became the sovereign to be appeased. Thus, if an object
such as a cart, tree, or well took the life of a King’s subject, the object
63
became the Crown’s in order to redress the loss of human life and
provide revenue. See Calero-Toledo v. Pearson Yacht Leasing Co.,
416 U.S. 663, 681, 94 S. Ct. 2080, 2090, 40 L. Ed. 2d 452 (1974)
(citing O. Holmes, The Common Law, c 1 (1881).
Forfeiture survived the journey into American law, although not
without criticism. Cf. Calero-Toledo, 416 U.S. at 689, n. 27, 94 S. Ct.
at 2095, n. 27; United States v. U.S. Coin and Currency, 401 U.S. 715,
719-20, 91 S. Ct. 1041, 1043-44, 28 L. Ed. 2d 434 (1971); United
States v. One 1976 Mercedes Benz 280S, 618 F.2d 453, 461 (7th Cir.
1980) (forfeiture in present law constitutes vestiges of “old, forgotten,
far-off things and battles long ago”). . . .
The classical distinction between civil and criminal forfeiture
was founded upon whether the penalty assessed was against the
person or against the thing. Forfeiture against the person operated in
personam and required a conviction before the property could be
wrested from the defendant. See Calero-Toledo, 416 U.S. at 682, 94
S. Ct. at 2091; One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S.
693, 700, 85 S. Ct. 1246, 1250, 14 L. Ed. 2d 170 (1965). Such
forfeitures were regarded as criminal in nature because they were
penal; they primarily sought to punish. Forfeiture against the thing
was in rem and the forfeiture was based upon the unlawful use of the
res, irrespective of its owner’s culpability. These forfeitures were
regarded as civil; their purpose was remedial. Calero-Toledo, 416
U.S. at 680-81, 94 S. Ct. at 2090; U.S. Coin & Currency, 401 U.S. at
719, 91 S. Ct. at 1043.
United States v. Seifuddin, 820 F.2d 1074, 1076-77 (9th Cir. 1987).
Criminal forfeiture under RICO is in personam. United States v.Bissell, 866
F.2d 1343, 1348 n.3 (11th Cir. 1989). In other words, it is a form of punishment
imposed by the jury to divest the criminal defendant of the profits of the illegal
activity for which he has been convicted. Id.; United States v. Conner, 752 F.2d
566, 576 (11th Cir. 1985); see also 18 U.S.C. § 1963(e); Fed. R. Crim. P. 32(d)(2).
64
RICO’s forfeiture penalty works to strip a convicted racketeer of all the fruits and
tools of his racketeering in an effort to strike at the heart of the illegal enterprise.
By providing a method by which to confiscate tainted property and proceeds,
Congress aimed to put criminal enterprises out of business. Russello v. United
States, 464 U.S. 16, 26-27, 104 S. Ct. 296, 302, 78 L. Ed. 2d 17 (1983). Forfeiture
is imposed as punishment in addition to any term of imprisonment and/or fine the
convicted racketeer may receive. See 18 U.S.C. §§ 3554, 1963(a); Libretti v.
United States, 516 U.S. 29, 38-39, 116 S. Ct. 356, 363, 133 L. Ed. 2d 271 (1995)
(“Forfeiture is an element of the sentence imposed following conviction or . . . a
plea of guilty . . . .”).
Because it seeks to penalize the defendant for his illegal activities, in
personam forfeiture reaches only that property, or portion thereof, owned by the
defendant. United States v. Peters, 777 F.2d 1294, 1296 (7th Cir. 1985) (“An
examination of the forfeiture provision reveals that Congress clearly intended that
the government acquire only that interest which the criminal defendant held in the
property.”); S. Rep. No. 98-225, at 207-08, reprinted in 1984 U.S.C.C.A.N. 3182,
3391 (“Criminal forfeiture is an in personam proceeding. Thus, an order of
forfeiture may reach only property of the defendant, save in those instances where
a transfer to a third party is voidable.”). Stated another way, the property itself is
65
not forfeited; rather, the defendant’s interest in the property is forfeited. If criminal
forfeiture reached beyond that portion of the property that was owned by a
defendant, such a form of forfeiture would be in rem, against the property, rather
than in personam, against the defendant. See United States v. Kennedy, 201 F.3d
1324, 1329 (11th Cir. 2000).
That criminal forfeiture can only reach a defendant’s interest in the subject
property makes sense. In the case of criminal forfeiture, the district court has
“jurisdiction to enter orders . . . without regard to the location of any property
which may be subject to forfeiture . . . or which has been ordered forfeited.” 18
U.S.C. § 1963(j). The district court’s power to enter orders relating to property
outside the court’s jurisdiction derives from its personal jurisdiction over the
defendant. Because the defendant is before the court, the court has the power to
adjudicate his ownership interest in property, by virtue of the criminal charges
against him. Forfeiture of the convicted defendant’s interest in illicitly obtained
property appropriately punishes the defendant by separating him from his
racketeering gains while leaving undisturbed the interests of innocent third parties
who are beyond the court’s jurisdiction. For this jurisdictional reason, an order of
forfeiture imposed upon a defendant as a penalty for his wrongdoing “determine[s]
the government’s title in property only as against the named defendants, while civil
66
forfeiture actions [which are brought in the jurisdiction where the res is located]
are in rem and determine the government’s title in property as against the whole
world.” United States v. Tit’s Cocktail Lounge, 873 F.2d 141, 143 (7th Cir. 1989).
2.
The Government in this case sought forfeiture of the Club under 18 U.S.C. §
1963(a)(3) as “property constituting, or derived from . . . proceeds which the
[convicted racketeers] obtained, directly or indirectly, from racketeering activity.”
Specifically, the Government argued to the jury in its closing argument that “as
soon as they started to build the Bell Gardens Bicycle Club, under Federal law, that
property became forfeitable to the United States. . . . The reason for this . . . is
because what was used to build the [Club], that twelve and a half million dollars,
came from proceeds of marijuana trafficking, and from that point forward, that
property was subject to forfeiture.”
Section 1963(a)(3) and the principle of in personam forfeiture, however,
dictate that the jury could forfeit only that portion of the Club owned by the
convicted racketeers. The district court acknowledged as much in its Amended
Final Order following the ancillary proceedings, in which it stated that “[i]f [the
67
forfeiture] were in rem, then the verdict would reach the entire property. However,
the only property forfeitable at this time is that which belonged to the criminal
defendants in this case whose interest in the Bell Gardens Bicycle Club . . . the jury
forfeited under [section] 1963(a)(3).” Kramer, 807 F. Supp. at 737. Forfeiture of
the entire Club, then, would have been appropriate only if the jury found that one
or more defendants were the exclusive owners of the Club. Cf. United States v.
Busher, 817 F.2d 1409, 1413 n.7 (9th Cir. 1987) (“The problem of forfeiture of an
entire enterprise is essentially limited to the situation where the convicted
defendant owns substantially all of the stock of a corporation, or where the
enterprise is a sole proprietorship. This is so because under section 1963 only the
defendant’s interest in the enterprise is forfeitable, not the enterprise itself. . . .
Thus, only where the culpable person owns the entire enterprise will it be subject
to complete forfeiture for violation of RICO.”).
The jury knew that the three defendants were not the exclusive owners of the
Club; they had seen ample evidence showing that PPA – an innocent party – held
an interest in the Club. They were reminded of that fact by the Government during
its closing argument, when it attempted to assuage the jury’s fears about forfeiting
property belonging, in part, to innocent owners:
Now, during your deliberations, you ought not to be concerned with,
well, what about the innocent people here? What about Park Place
68
Associates? What about Sanwa Bank[,] where there is a legitimate
loan. [T]hose individuals can petition the court to get back any interest
that they have, or to preserve and protect any interest that they have in
the [Club], or any loans that are outstanding.
Thus, the jury clearly understood that it was being asked to forfeit property beyond
that owned by the defendants.
Despite the evidence showing that the defendants were not the exclusive
owners of the Club, the jury was never asked whether only part of the Club was
subject to forfeiture. Rather, the jury was limited to an all-or-nothing decision.73
In accordance with the Government’s request, the forfeiture verdicts returned
against Benjamin Kramer, Jack Kramer, and Michael Gilbert purported to forfeit
the entire Club – “the ongoing business, premises and building, together with
fixtures.”
The jury, however, could not legally order the forfeiture of the entire Club.
While the defendants’ tainted interests in the business were subject to forfeiture,
the poorly drafted verdict forms did not give the jury the opportunity to limit the
forfeiture to those interests. The end result was a verdict of forfeiture that
73
The special verdict forms asked whether the Club “constituted or was derived from any
proceeds which [the defendant] obtained directly or indirectly from racketeering activity.” If the
jury answered in the affirmative, the only remaining question regarding the Club was whether
“the Bell Gardens Bicycle Club [was] subject to forfeiture.”
69
purported to forfeit the Club in its entirety, even though the evidence clearly
established that the three defendants did not own the entire Club.
As a result of the jury’s overbroad pronouncement, the Bell Gardens Bicycle
Club – a business with an approximate value of $150 million in 1990 – became the
centerpiece of an order of forfeiture entered by the district court on April 3, 1990,
immediately after the jury returned the last forfeiture verdict. In accordance with
the verdict, the court ordered that “the ongoing business, premises and building,
together with fixtures, . . . known as the Bell Gardens Bicycle Club be and hereby
are forfeited to the United States of America for its full use and benefit, pursuant to
18 U.S.C. § 1963(a)(3),” and further ordered that the United States “immediately
seize the physical premises of the Club.”
Despite the in personam limitations of criminal forfeiture proceedings, the
district court’s order erroneously conflated the concepts of in personam and in rem
forfeiture by professing to give the Government a piece of real estate and an
ongoing business in California, as opposed to the defendants’ limited ownership
interest in the business. At least one commentator was puzzled by this result, and
admitted being unable to “explain how the jury could find that the entire Club was
subject to forfeiture as racketeering proceeds under section 1963(a)(3) when only a
70
part of the financing of the Club came from drug money.” 2 David B. Smith,
Prosecution and Defense of Forfeiture Cases ¶ 14.08 n.37 (2000).74
The trial court sought to correct its mistake in its Amended Final Order
following the ancillary proceedings, in which it described the jury verdict as
“forfeiting the interests of Ben Kramer, Jack Kramer and Michael Gilbert in the
Bicycle Club,” and stating that “[o]nly the interests of [the] three convicted
defendants in the Bicycle Club were forfeited.” Kramer, 807 F. Supp. at 709-10(emphasis added). This complete re-characterization of the court’s initial in rem
order of forfeiture, however, came too late. Since the jury’s verdict reached
beyond those assets that were legally forfeitable under the applicable statute, the
verdict was invalid. Without a valid verdict of forfeiture, the district court cannot
properly enter an order of forfeiture unless the defendant waives his right to a jury
trial on that issue. See United States v. Bornfield, 145 F.3d 1123, 1138-39 (10th
74
During the ancillary proceedings, counsel for Julie Coyne, Richard Kirschner,
advanced an illustrative hypothetical:
If you take the Government’s reasoning to its logical conclusion . . . you can have
a convicted felon who bought a hundred shares of General Motors, and he used
drug proceeds, and you have a hundred thousand other shareholders in General
Motors, all of the shareholders[’], including the drug dealer’s money, are used to
develop General Motors[.] [I]f you follow the Government’s reasoning and
theory, all of General Motors is forfeited to the Government, all of the dividends
are suspended, and it’s up to the other 99,000 shareholders to prove their interest
in an ancillary hearing, because the money got commingled, and it was used to
develop General Motors. Just not the law. Just doesn’t happen.
71
Cir. 1998). No such waiver was made in this case. Thus, the Government actually
holds nothing by virtue of the forfeiture order against Benjamin Kramer.
B.
In addition to its vagueness and overbreadth, the verdict of forfeiture against
Benjamin Kramer was improper on a more fundamental level. Benjamin Kramer
never owned any part of the Club. The Club itself was a joint venture between two
partnerships: PPA and LCP. Thus, the Joint Venture was the club’s true owner.
See Barr Lumber Co., Inc. v. Old Ivy Homebuilders, Inc., 40 Cal. Rptr. 2d 717,
720 (Cal. Ct. App. 1995) (holding that an individual partner is not deemed the
owner of specific partnership assets by virtue of his status as partner; property of
the partnership belongs to the partnership, not the partner).
The fact that the Joint Venture, and not Benjamin Kramer, owned the Club
was conclusively established at trial. The jury saw the Joint Venture Agreement
between PPA and the LCP general partnership, which stated clearly that PPA and
LCP had associated to form the Joint Venture known as the Bell Gardens Bicycle
Club. Further, the purpose of the Joint Venture set forth in the agreement was “to
organize, own, and operate the Bell Gardens Bicycle Club . . . and to . . . own the
real property on which said card club is to be operated” (emphasis added). The
72
jury also saw the loan agreement between CGL and the Club, in which the Bell
Gardens Bicycle Club was described as “a Joint Venture consisting of [PPA], a
California Limited Partnership . . . and [LCP], a California General Partnership”
and was referred to as “Owner” throughout. Finally, the jury saw the Deed of
Trust executed by the Bell Gardens Bicycle Club in favor of CGL, wherein the
Club was named as the owner of the parcels of land on which the card club was
built.
At most, then, what Benjamin Kramer owned was a silent partnership
interest in LCP general partnership, which later became LCP, Ltd. Thus, it was
Benjamin Kramer’s silent interest in LCP, Ltd. that should have been targeted for
forfeiture in the indictment, jury instructions, and special verdict forms, not the
Bell Gardens Bicycle Club.75 Unfortunately for the Government, this was only
made clear during the ancillary proceedings. Because the jury – and the district
court, by its initial order of forfeiture – forfeited property that Kramer did not
75
As an alternative to forfeiting Benjamin Kramer’s silent partnership interest in LCP,
Ltd., the Government could have sought forfeiture of, as proceeds of racketeering, Benjamin
Kramer’s share of the tainted money used to build the Club, his share of the fifteen percent
interest rate paid by the Joint Venture in the CGL mortgage, and his share of the fifteen percent
income participation kicker. Of course, under any of these bases of forfeiture, the Government’s
recovery would have been limited to Benjamin Kramer’s share of the drug proceeds since the
Government elected not to indict Benjamin Kramer’s drug-trafficking partners. In any event, it
is beyond doubt that Kramer had no ownership interest in the Club for the jury to forfeit.
73
own, the Government holds nothing by virtue of the order of forfeiture against
Benjamin Kramer.76
C.
Even if the forfeiture proceedings had properly targeted Kramer’s interest in
LCP, Ltd., rather than the Club, the jury’s verdict would remain fatally deficient.
“Rule 31(e) of the Federal Rules of Criminal Procedure provides for the procedural
implementation of the RICO criminal forfeiture provision . . . and requires a
special verdict.” United States v. Amend, 791 F.2d 1120, 1128 (4th Cir. 1986).
By its terms, Rule 31(e) calls for the special verdict to set forth “the extent of the
interest or property subject to forfeiture, if any.” Fed. R. Crim. P. 31(e).
Quite simply, there was nothing special about the special verdict of
forfeiture forms submitted to the jury. The forms, essentially identical as to each
defendant, merely asked whether the Club “constituted or was derived from any
76
In the district court’s Amended Final Order following the ancillary proceedings, the
court attempted to shift the focus of forfeiture from the Club to LCP, Ltd. The court could not
have ordered forfeiture of LCP, Ltd. at any time during the proceedings, however, because
Federal Rule of Criminal Procedure 7(c)(2) provides that “[n]o judgment of forfeiture may be
entered in a criminal proceeding unless the indictment or the information shall allege the extent
of the interest or property subject to forfeiture.” The grand jury’s indictment alleged that the
Club, rather than LCP, Ltd., was subject to forfeiture in the instant case. Despite the flaws
inherent in such an allegation, the court was prohibited by Rule 7(c)(2) from correcting the grand
jury’s mistakes on its own initiative. Rather, the court could only order forfeiture of that interest
or property named in the indictment, to wit: the Bell Gardens Bicycle Club.
74
proceeds which Benjamin Kramer obtained directly or indirectly from racketeering
activity.” If the jury answered in the affirmative, the only remaining question
regarding the Club was whether “the Bell Gardens Bicycle Club [was] subject to
forfeiture.”
During the ancillary proceedings, petitioner Julie Coyne’s counsel, Richard
Kirschner, pointed out that “only a convicted defendant’s interest in a club is
forfeited or an asset is forfeited, not every other interest in the world. And that’s
the problem. This jury didn’t come back and say what interest the Kramers held in
the club.” The court replied that “[t]hey didn’t have any evidence on that. They
weren’t asked to do that.” Indeed, the verdict forms asked neither what percentage
of ownership each defendant held in the subject property nor how much of that
interest was subject to forfeiture. As discussed supra, Part III.B., the effect of this
deficiency, when read in the light most favorable to the Government, was to assign
the Government an unspecified, and therefore worthless, interest in LCP, Ltd.77
D.
77Coyne’s counsel stated at the outset of the ancillary proceedings that “[The
Government] said, Fellas, we own the Bicycle Club. Our response to them has been, Fellas, you
may own the Kramer interest in the Bicycle Club, and you may own Michael Gilbert’s interest in
the Bicycle Club, [but] you sure as heck don’t own the whole Bicycle Club, because the jury did
not come back with an indication of what percentage the Kramers or Michael Gilbert owned.
You say you own a hundred percent of it, we say you own zero.”
75
Finally, even if the special verdict of forfeiture had been in proper form, title
to Kramer’s property never vested in the Government. On August 29, 1990, the
district court sentenced Benjamin Kramer to a “TOTAL sentence” of “FORTY
FIVE years confinement. . . . Commited [sic] fines of $460,000.00. . . [and a]
$1,000.00 assessment.” The court made no mention of forfeiture, apparently
relying on its April 3 order78 as the final disposition of that issue. The court could
not have ordered forfeiture of Kramer’s property on April 3, however, because
criminal forfeiture “may not take place until a judgment of conviction is entered
and sentence imposed.” United States v. Alexander, 772 F. Supp. 440, 440 (D.
Minn. 1990). Because the court failed to properly enter an order of forfeiture, the
Government never obtained the right to seize Kramer’s property. Additionally, the
condition precedent to the start of ancillary proceedings under 1963(l) – an “order
of forfeiture” – never occurred. Thus, the district court properly denied the
Government’s request for a mandatory injunction.
1.
78
On April 3, 1990, immediately after the final forfeiture verdict was returned, the court
“entered the government’s proposed order for forfeiture, and also seized the Club in its entirety,
appointed an interim trustee, and prevented the Club or its owners from distributing profits or
transferring their interests.” Kramer, 912 F.2d at 1259.
76
It is beyond doubt that criminal forfeiture is part of a defendant’s sentence.
18 U.S.C. §§ 1963(a), 3554; United States v. Bissell, 866 F.2d 1343, 1349 n.3
(11th Cir. 1989) (“[C]riminal forfeiture operates in personam against the
defendant, serving as a penalty upon conviction.”); United States v. Derman, 211
F.3d 175, 182 (1st Cir. 2000) (“[T]he forfeiture order . . . is a part of the sentence,
and becomes final for purposes of appeal when the court issues its judgment.”)
(citation omitted). In fact, forfeiture is a mandatory element of sentencing for a
violation of 18 U.S.C. § 1962. United States v. L’Hoste, 609 F.2d 796, 809-13
(5th Cir. 1980). As such, it must be ordered at a hearing that affords the defendant
his right of allocution.79 In the instant case, however, the court entered the order of
forfeiture at an “impromptu hearing” immediately following the verdicts. Kramer,
912 F.2d at 1259. Indeed, neither Benjamin Kramer nor his attorney were even
present in the courtroom when the order was entered. As such, the court could not,
as required by Federal Rule of Criminal Procedure 32(a)(1),
79
Black's Law Dictionary defines “allocution” as:
1. A trial judge’s formal address to a convicted defendant, asking him or her to
speak in mitigation of the sentence to be imposed. This address is required under
Fed. R. Crim. P. 32(c)(3)(C).
2. An unsworn statement from a convicted defendant to the sentencing judge or
jury in which the defendant can ask for mercy, explain his or her conduct,
apologize for the crime, or say anything else in an effort to lessen the impending
sentence. This statement is not subject to cross-examination."
Black's Law Dictionary 75 (7th ed.1999).
77
(A) determine that the defendant and defendant’s counsel have had the
opportunity to read and discuss the presentence investigation report[;]
(B) afford counsel for the defendant an opportunity to speak on behalf
of the defendant; and
(C) address the defendant personally and determine if the defendant
wishes to make a statement and to present any information in
mitigation of the sentence.
Fed. R. Crim. P. 32(a)(1)(A)-(C) (1990) (current version at Fed. R. Crim. P.
32(c)(3)(A)-(E)). As Kramer was not afforded an opportunity to allocute on April
3, the purported order of forfeiture entered on that date could not have been part of
his sentence.
Moreover, it is clear that the trial court did not intend the impromptu
gathering to function as a sentencing hearing. Counsel for David Pierson – a third
party claimant – called the court’s attention to the fact that “the Government seeks
a final judgment of forfeiture, notwithstanding the fact that Rule 32(b) provides
that forfeiture orders don’t occur until sentencing. We are not at sentencing today.
We are not anywhere close; yet they’re seeking a final order of forfeiture.” Indeed,
the most the court could have done on April 3 was issue temporary restraints to
maintain the status quo of the property. See 18 U.S.C. § 1963(d).80 The
80
18 U.S.C. § 1963(d)(1) (1994) provides:
Upon application of the United States, the court may enter a restraining order or
injunction, require the execution of a satisfactory performance bond, or take any
other action to preserve the availability of property described in subsection (a) for
forfeiture under this section –
(A) upon the filing of an indictment or information charging a violation of
78
prosecution erroneously replied, however, that the court need not wait until
sentencing to enter the order of forfeiture, for 18 U.S.C. § 1963(e) mandates that an
order of forfeiture be entered “upon conviction,” and all of the defendants in the
case had been “convicted” within the meaning of the statute. While referring the
district court to our opinion in L’Hoste for the proposition that forfeiture is
mandatory, the prosecution failed to point out that L’Hoste also held that forfeiture
should be ordered as part of a defendant’s sentence. L’Hoste, 609 F.2d at 812-13.
Unfortunately, the court adopted the prosecution’s argument and entered the
forfeiture order on April 3. In so doing, the court implicitly agreed that the order
of forfeiture need not be – and was not – part of Kramer’s sentence.81
2.
section 1962 of this chapter and alleging that the property with respect to
which the order is sought would, in the event of a conviction, be subject to
forfeiture under this section.
The court’s judgment on August 29 – containing no order of forfeiture – superseded the April 3
order, terminated any temporary restraints on the property, and ended the case. See United
States v. Gelb, 826 F.2d 1175, 1176 (2d Cir. 1987) (“Congress appears to have provided no
durational limitation to [post-indictment restraining orders] . . . short of the termination of the
related criminal prosecution.”).
81
Because forfeiture is a mandatory element of any sentence under 18 U.S.C. § 1963(a),
L’Hoste, 609 F.2d at 809-13, Kramer’s sentence “was imposed in violation of law.” 18 U.S.C. §
3742(b)(1). The Government’s remedy was an appeal to this court within 30 days from the
entry of judgment or notice of appeal by any defendant. Fed. R. App. P. 4(b) (1990) (current
version at Fed. R. App. P. 4(b)(1)(B)). The Government took no such appeal. Thus, although
the court clearly erred, the Government has waived the error and the sentence is final.
79
Because the April 3 order was not part of Kramer’s sentence, it did not
forfeit his property to the Government. The premature order was merely an invalid
attempt to bypass the procedurally required method of criminal forfeiture set forth
in Federal Rule of Criminal Procedure 32(b).82 Until its amendment in 1996, Rule
32(b) read as follows:
(b) Judgment.
(1) In General. A judgment of conviction shall set forth the
plea, the verdict or findings, and the adjudication and sentence. . . .
(2) Criminal Forfeiture. When a verdict contains a finding of
property subject to a criminal forfeiture, the judgment of criminal
forfeiture shall authorize the Attorney General to seize the interest or
property subject to forfeiture . . . .
Fed. R. Crim. P. 32(b) (1990) (emphasis added) (current version at Fed. R. Crim.
P. 32(d) (1994).83 While subsection (b)(2) includes the terms “verdict” and
“judgment,” it states that only a “judgment” of criminal forfeiture shall authorize
82
Rule 32(b) was promulgated “to provide procedural implementation of the . . . criminal
forfeiture provisions of . . . § 1963.” Fed. R. Crim. P. 32(b) advisory committee notes on 1972
amendments. Specifically, Rule 32(b) was intended to be read in conjunction with 18 U.S.C. §
1963(c) (amended before the time of trial to section 1963(e)), which provided for seizure and
disposition of criminally forfeited property. Id. At the time of trial, section 1963(e) stated that
“[u]pon conviction of a person under this section, the court shall authorize the Attorney General
to seize all property or other interest declared forfeited under this section upon such terms and
conditions as the court shall deem proper.” 18 U.S.C. § 1963(e) (1990).
83
Rule 32(b) was amended in 1996 to allow the court to issue a “preliminary order of
forfeiture” before sentencing. The purpose of the order is merely to protect the forfeitable
property between verdict and sentencing, much like a pre-1996 restraining order. The
preliminary order, however, is not final as to the defendant and thus not appealable. “[B]oth
before and after the 1996 amendments the key moment for determining finality for the purpose
of appeal is sentencing.” United States v. Derman, 211 F.3d 175, 182 n.9 (1st Cir. 2000).
80
the Attorney General to seize the defendant’s property. Subsection (b)(1) requires
that a “judgment . . . set forth the . . . sentence.” Because it must set forth the
terms of the defendant’s sentence, the “judgment” in subsection (b)(2) authorizing
the Attorney General to seize the defendant’s property could not be entered at any
time prior to sentencing. See United States v. Ripinsky, 20 F.3d 359, 362 (9th Cir.
1994) (holding that until a judgment of conviction was entered at sentencing, the
sole legal basis for continuing to restrain forfeitable assets was a pretrial
restraining order); Alexander, 772 F. Supp. at 441 (stating that Rule 32(b)
“contemplate[s] an order of forfeiture at the time of sentencing”).84 Thus, the trial
court’s order of forfeiture entered on April 3 – nearly five months before Kramer’s
sentencing – was not a “judgment” authorizing the Government to seize Kramer’s
property.85
84
The court also noted in Alexander that “review of RICO convictions reveals the
general practice is, in fact, imposition of forfeiture at the time of sentencing.” Id. at 442(collecting cases).
85
The law of the case doctrine, see supra note 51, is no impediment to our statement that
there was no valid judgment of forfeiture against Benjamin Kramer. The 1990 expedited appeal
generated a memorandum opinion, in which the court stated that “[b]ecause no hearing has been
conducted, the facts recited by the court are taken from the briefs and do not represent opinions
of the court.” Kramer, 912 F.2d at 1258. Thus, the panel’s characterization of the April 3 order
as an order of forfeiture is merely a misrepresentation by the parties in their briefs. As for the
1996 opinion, the panel did not consider the forfeiture issue as to Kramer because Kramer did
not challenge the forfeiture verdict the jury returned against him. Kramer, 73 F.3d at 1070.
81
Similarly, the court’s April 3 order was not the “order of forfeiture” required
to begin ancillary proceedings under 18 U.S.C. § 1963(l)(1). Although one may
argue that the “order” required by 1963(l) may precede the “judgment” entered at
sentencing under Rule 32(b)(2), such an argument would be wholly unpersuasive.
First, the terms “judgment” and “order” appear to be used interchangeably
throughout section 1963. Subsection (a), for instance, provides that “[t]he court, in
imposing sentence . . . shall order” forfeiture, while subsection (e) states that “upon
conviction . . . the court shall enter a judgment of forfeiture.” Both subsections
anticipate that forfeiture will occur at sentencing.
Moreover, section 1963(l) ancillary proceedings are held so that innocent
third-party owners can get their interests back from the government. This
presupposes that the government has something for third-parties to claim. In other
words, ancillary proceedings – which are activated under 1963(l) by an order of
forfeiture – could not take place without the government’s seizure of the property,
which is authorized under 1963(e) and Rule 32(b)(2) by a judgment of forfeiture.
See United States v. Ginsburg, 773 F.2d 798, 801 (7th Cir. 1985) (“[T]he
government's interest in property subject to criminal forfeiture does not attach until
the defendant is convicted of the crime for which the forfeiture is imposed.”).
Thus, even if the terms have different meanings, it is clear from the forfeiture
82
scheme that the judgment, rather than the order, must come first. As noted above,
the judgment may not be entered until sentencing. Since it cannot logically
precede the judgment, the “order of forfeiture” required by section 1963(l) also
may not be entered until sentencing. Therefore, the order of forfeiture entered by
the court on April 3 – nearly five months before sentencing – was not sufficient to
trigger the start of ancillary proceedings pursuant to 1963(l). Because the district
court could not order the Gilberts to file petitions in a nonexistent proceeding, it
properly denied the Government’s request for a mandatory injunction.
V.
For the reasons herein stated, the judgment of the district court is
AFFIRMED.
EDMONDSON, Circuit Judge, concurs in judgment only.
83