United States v. Maritime Life Caribbean Limited

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-10889
________________________
D.C. Docket No. 1:05-cr-20859-PCH-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARITIME LIFE CARIBBEAN LIMITED,
Interested Party-Appellant,
RAUL J. GUTIERREZ,
Defendant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_______________________
(January 16, 2019)
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Before WILLIAM PRYOR and MARTIN, Circuit Judges, and WOOD, *
District Judge.
WILLIAM PRYOR, Circuit Judge:
This appeal involves two questions about an ancillary third-party forfeiture
proceeding in which Maritime Life Caribbean asserted that it was given a security
interest in the forfeited property: whether the district court erred in requiring
Maritime Life to prove the authenticity of the collateral assignment that allegedly
granted it a security interest in the forfeited property by a preponderance of the
evidence, and whether the district court erred in permitting the Republic of
Trinidad and Tobago to intervene in the forfeiture proceeding even though it had
no legal interest in the property. We conclude that, although both rulings were in
error, neither error warrants reversal. We affirm.
I. BACKGROUND
Raul Gutierrez pleaded guilty in 2006 to a variety of wire- and bank-fraud
charges arising from a bid-rigging scheme involving the construction of an airport
in Trinidad and Tobago. After sentencing, the district court entered a preliminary
order of forfeiture against him in the amount of $22,556,100, representing the
proceeds of his criminal activity. The forfeiture included Gutierrez’s interest in a
piece of real property located at 12850 Red Road in Coral Cables, Florida, the title
*
The Honorable Lisa Godbey Wood, United States District Judge for the Southern District of
Georgia, sitting by designation.
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for which was held by Inversiones Rapidven, S.A. Although the plea agreement
exhaustively listed Gutierrez’s assets and liabilities, it did not mention any
encumbrance on the Red Road property.
The Republic of Trinidad and Tobago moved to intervene in the forfeiture
proceeding under Federal Rule of Criminal Procedure 32.2. Trinidad asserted that
it was a victim of the bid-rigging conspiracy and that it had an interest in any
forfeiture proceeds that might result from the sale of the Red Road property, but it
did not assert any legal interest in the property itself. The district court expressed
skepticism about the propriety of permitting Trinidad to intervene and
acknowledged that it was “not sure if [Trinidad has] standing” under the statute
governing criminal forfeitures, 21 U.S.C. § 853. Despite these misgivings, the
district court granted Trinidad’s motion to intervene. It directed Trinidad and the
government to “form a committee on the government[/]victim side and decide who
will be speaking for that group.”
At a later status conference, the government expressed concern over a
“potential conflict” between the parties’ interests and argued that victims like
Trinidad do not “have standing in a forfeiture proceeding.” The district court
disregarded this concern on the ground that the government was “going to get a lot
of cooperation from the lawyers for [Trinidad]” and Trinidad probably would end
up “carrying the laboring oar . . . from this point forward.” In the district court’s
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view, Trinidad’s intervention was permissible because it was the party who was
“going to benefit if the government wins on the forfeiture.”
In 2010, the district court instructed the government to issue a Notice of
Criminal Forfeiture addressed to Steve Ferguson, the former chief executive officer
of Maritime Life. Ferguson and Gutierrez were longtime business associates and
friends, and both were implicated in the criminal charges underlying the forfeiture
proceeding. Maritime responded to the notice by filing a third-party claim asserting
an interest in the Red Road property under the criminal-forfeiture statute, 21
U.S.C. § 853(n), and Rule 32.2(c). To support its claim, Maritime produced an
alleged collateral assignment that purported to memorialize a transaction in which
Gutierrez granted a security interest in the Red Road property to Maritime as
collateral for a $2 million loan to Keystone Property Developers, Ltd., Gutierrez’s
construction company. The alleged assignment is dated July 24, 2001 and was
signed by Gutierrez in his capacity as president of Calmaquip Engineering
Corporation, but it was never recorded.
The government and Trinidad opposed Maritime’s claim. The parties then
engaged in protracted discovery in which Trinidad played a significant role,
leading 14 depositions on behalf of the government. Maritime objected to
Trinidad’s participation in the litigation, but the district court denied its motion.
The district court acknowledged that Trinidad “does not have a direct claim under
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[section] 853 or under the forfeiture claim” but permitted Trinidad to proceed, “not
in [its] own rights, but . . . to do the work on behalf of the government.”
After discovery, Trinidad and the government jointly moved for summary
judgment, but the district court denied that motion. Instead, it sua sponte decided
to hold a bifurcated trial with an initial phase focused solely on the question
whether “to admit the collateral assignment as being genuine and authentic” under
Federal Rule of Evidence 901. The second phase was to address the merits of
Maritime’s interest in the Red Road property. The district court explained that the
question of authenticity was “a nice clean issue” that, if resolved against Maritime,
would obviate the need to resolve the complicated dispute about the legal effect of
an unrecorded assignment of a security interest in real property for which
Gutierrez, the party who allegedly conveyed the assignment, did not hold title.
Maritime objected on the ground that the authenticity issue should be consolidated
with the merits issues, but it later conceded that an adverse ruling on authenticity
would make the “other issues . . . go away.”
At the hearing for the first phase of trial, Maritime presented three witnesses:
Lesley Alfonso, the Maritime director who allegedly discovered the collateral
assignment; Frank Norwitch, a certified document examiner who reviewed the
collateral assignment; and Raul Gutierrez, who allegedly signed the assignment.
The government presented no live witnesses. Alfonso testified that in early 2010,
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Andrew Ferguson, Maritime’s chief executive officer and the son of Steve
Ferguson, asked her to search for any documents related to the Red Road property.
She asserted that she discovered the assignment in the files of a deceased Maritime
executive who had managed the loan transaction with Gutierrez. Alfonso also
testified that she returned to the storage room to ensure that there were no other
documents responsive to the description she was given. Cross-examination by the
government and questioning by the district court made clear that this testimony
conflicted with Alfonso’s earlier deposition testimony, in which she agreed that
she did not have “occasion to go back into the storage room and look at the folder
or anything else that was around that document.”
Norwitch testified as an expert after the government stipulated to his
qualifications. He testified that he examined the watermark and the ink used in
both the typed and handwritten portions of the collateral assignment and concluded
that there was “no evidence that this document was anything other than what it is
purported to be.” But Norwitch explained that the ink used in the document has
been in commercial use for decades and that he could not determine “when [the]
document was signed.” And Gutierrez testified that he executed the collateral
assignment on July 24, 2001, after Maritime requested additional collateral. He
admitted that he failed to list the assignment in his presentence investigation report
and testified that he never thought to record the multi-million-dollar transaction.
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Gutierrez also acknowledged that he had been convicted of crimes of fraud and
that he had falsified his community-service hours after being released from prison.
After the hearing for the first phase of trial, the district court ruled that
Maritime had failed to carry its burden of proving the authenticity of the collateral
assignment “by the greater weight of the evidence.” The court determined that
circumstantial evidence and unexplained defects present on the face of the
document undermined the inference that the assignment was authentic. It also
determined that the expert testimony was inconclusive, that Alfonso and Gutierrez
were not credible, and that virtually no evidence corroborated the authenticity of
the assignment. Having ruled that the collateral assignment was inauthentic, the
district court concluded that it was unnecessary to proceed to the second phase of
trial and denied Maritime’s claim.
II. STANDARD OF REVIEW
“We review a district court’s legal conclusions regarding third-party claims
to criminally forfeited property de novo and its factual findings for clear error.”
United States v. Marion, 562 F.3d 1330, 1335 (11th Cir. 2009).
III. DISCUSSION
We divide our discussion in two parts. First, we explain that although the
district court applied the wrong standard when it assessed the authenticity of the
alleged collateral assignment, the error was harmless. Second, we explain that the
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district court erred by permitting Trinidad to intervene, but this error too does not
warrant reversal.
A. The District Court Committed Harmless Error in Ruling that the
Collateral Assignment Was Inauthentic.
The district court ruled that the “burden of proof” was “on Maritime to prove
by the greater weight of the evidence that the collateral assignment” is “an
authentic document,” but this ruling was in error. Even so, Maritime has suffered
no prejudice.
A two-step process governs the determination of whether a document is
authentic. The district court must first make a preliminary assessment of
authenticity under Rule 901, which “requires a proponent to present ‘sufficient
evidence to make out a prima facie case that the proffered evidence is what it
purports to be.’” United States v. Lebowitz, 676 F.3d 1000, 1009 (11th Cir. 2012)
(quoting United States v. Belfast, 611 F.3d 783, 819 (11th Cir. 2010)). If the
proponent satisfies this “prima facie burden,” the inquiry proceeds to a second
step, in which “the evidence may be admitted, and the ultimate question of
authenticity is then decided by the [factfinder].” Id.; see also In re Int’l Mgmt.
Assocs., LLC, 781 F.3d 1262, 1267 (11th Cir. 2015) (“Once [a] prima facie
showing of authenticity [is] made, the ultimate question of the authenticity of the
documents [is] left to the factfinder.”).
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The first phase of the bifurcated trial framework adopted by the district court
was intended to address only the preliminary question of authenticity. Under the
two-step process contemplated by Rule 901, Maritime bore the burden of
establishing a prima facie case of authenticity at the first stage. Only at the second
step would “the trier of fact . . . appraise whether the proffered evidence is in fact
what it purports to be.” United States v. Caldwell, 776 F.2d 989, 1002 (11th Cir.
1985).
By requiring Maritime to prove authenticity by “the greater weight of the
evidence,” the district court compressed the two steps of the inquiry under Rule
901 into one and conflated the issue of authenticity with the issue of entitlement to
the proceeds of the sale of the Red Road property, but this technical error need not
warrant reversal. Federal Rule of Civil Procedure 61 permits reversal based on a
trial error “only where the error has caused substantial prejudice to the affected
party (or, stated somewhat differently, affected the party's substantial rights or
resulted in substantial injustice).” Peat, Inc. v. Vanguard Research, Inc., 378 F.3d
1154, 1162 (11th Cir. 2004) (internal quotation marks omitted). The error by the
district court prejudiced Maritime only if there is a “reasonable likelihood that the
outcome would have been different” if the district court had ruled that Maritime
satisfied its burden to prove a prima facie case of authenticity before proceeding to
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determine whether Maritime had an interest in the Red Road property. United
States v. Jeri, 869 F.3d 1247, 1262 (11th Cir. 2017).
Maritime suffered no prejudice. If the district court had followed the process
contemplated by Rule 901, it would have answered the ultimate question of
authenticity in the same way; the outcome of the trial would not have differed.
The first phase of the trial featured all of the evidence relevant to the
question of authenticity. Maritime was on notice that the district court would apply
a preponderance standard in determining whether the assignment was authentic
and had every incentive to produce all relevant evidence. The second phase would
have been a bench trial, see 21 U.S.C. § 853(n)(2), so the district court inevitably
would have reached the same answer to the “ultimate question of authenticity”
when it acted as the finder of fact. Lebowitz, 676 F.3d at 1009.
The district court was entitled to find that the assignment was not authentic
under the preponderance standard applicable at the second step of the inquiry
under Rule 901, and Maritime’s claim was bound to fail if the assignment was
inauthentic. Maritime never asserted any other potential source of an interest in the
Red Road property, and its trial counsel even conceded that it “only has a claim if
it has an assignment.” In other words, Maritime’s claim stood or fell with the
authenticity of the collateral assignment.
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The collateral assignment was suspect on its face. It was neither witnessed
nor notarized, even though Raul Gutierrez admitted that his secretary was a notary.
The document does not so much as mention the legal titleholder of the Red Road
property, Inversiones Rapidven, and contains no legal description of the property.
The document was printed on Calmaquip letterhead, even though Lesley Alfonso,
a Maritime director, testified that it was the practice of Maritime to prepare its own
loan documents. The assignment was purportedly created to secure a limited
guarantee agreement in which Maritime lent $2 million to Keystone Construction.
The assignment states that the limited guaranty agreement was attached to it, but
Alfonso testified that nothing was attached to the assignment when she allegedly
found it. Maritime’s own expert concluded that there was no evidence suggesting
that anything had ever been attached to the assignment. And the assignment was
never recorded—an astonishing oversight in a multi-million-dollar transaction.
Circumstantial evidence also supported the finding that the assignment was
inauthentic. The limited guaranty agreement makes no mention of the collateral
assignment. And as the district court explained, there was “not a single document”
that “referenced the collateral assignment . . . before or after” the assignment was
allegedly executed, other than a letter that Gutierrez purportedly sent to Richard
Lacle, his associate at Inversiones Rapidven. This letter lacked any indicia of
authenticity, such as a letterhead, physical or email address, or method of
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transmission. And Lacle denied ever receiving the letter and suggested that it was
fabricated. And finally, Gutierrez listed the Red Road property as an
unencumbered asset in his presentence investigation report and failed to list the
collateral assignment as a debt.
Based on this evidence, the district court was entitled to infer that there was
a post hoc plot between Gutierrez and Maritime to spare the Red Road property
from forfeiture through a fabricated assignment of an interest to Maritime. As we
have explained, “[a] district court has discretion to determine authenticity, and that
determination should not be disturbed on appeal absent a showing that there is no
competent evidence in the record to support it.” United States v. Siddiqui, 235 F.3d
1318, 1322 (11th Cir. 2000). Even if we were to assume that Gutierrez’s signature
on the assignment is genuine, it is entirely possible that he signed shortly before he
went to prison in an effort to shield his property from forfeiture. Ample evidence
established the existence of a close relationship between Gutierrez and the officers
of Maritime. We reject Maritime’s assertion that Gutierrez could not possibly have
anticipated that the government would seek forfeiture of his property. We expect
that a person who knows he is under investigation in a case of complex financial
fraud could have foreseen the impending forfeiture.
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Ample evidence supports the finding by the district court on the ultimate
question of authenticity. And that finding controlled whether Maritime had an
interest in the Red Road property. So no prejudicial error occurred.
B. Trinidad’s Intervention Does Not Merit Reversal.
Maritime also argues, and we agree, that the district court erred in
permitting Trinidad, a foreign sovereign, to intervene in the ancillary
proceeding to litigate on behalf of the United States. To represent the United
States, an attorney must be either a United States Attorney, an assistant United
States Attorney, or a special attorney. See 28 U.S.C. § 541(a) (creating
procedures for appointing a United States Attorney for each judicial district); id.§ 542(a) (creating procedures for appointing assistant United States Attorneys);
id. § 543(a) (creating procedures for appointing special attorneys to assist
United States Attorneys). And every attorney representing the United States
must take an oath of office. See id. § 544 (requiring United States Attorneys,
assistant United States Attorneys, and specially appointed attorneys to take an
oath to faithfully execute their duties). Trinidad was not specially appointed to
litigate on behalf of the United States and took no oath of office.
Nor did Trinidad have standing to intervene to defend its own interests.
Congress has created one—and only one—means for interested third-parties to
participate in a criminal-forfeiture proceeding: asserting a “legal right, title, or
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interest” sufficient for standing in an ancillary proceeding, 21 U.S.C. § 853(n).
Section 853(k) of the statute governing criminal forfeitures provides that
“[e]xcept as provided in subsection (n), no party claiming an interest in property
subject to forfeiture under this section” may “intervene in a trial or appeal of a
criminal case involving the forfeiture of such property under this section.” Id.§ 853(k). As we have explained, “[a]n ancillary proceeding constitutes the sole
means by which a third-party claimant can establish entitlement to return of
forfeited property.” United States v. Davenport, 668 F.3d 1316, 1320 (11th Cir.
2012). Trinidad made no attempt to intervene under section 853(n) and did not
assert any “legal right, title, or interest” in the Red Road property, 21 U.S.C.
§ 853(n).
Although there was no legal basis for Trinidad’s intervention, this error
too does not warrant reversal. Maritime makes two arguments about prejudice,
but neither is persuasive.
First, Maritime argues that Trinidad’s participation was prejudicial
because the district court relied on deposition testimony elicited by Trinidad in
finding a material inconsistency in the testimony of Alfonso. But the bare fact
that the district court relied in part on evidence generated by Trinidad to
discredit Alfonso’s testimony does not prove prejudicial error. As the district
court stated, its ruling against Maritime did not depend on its rejection of
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Alfonso’s testimony. The district court concluded that “even if” Alfonso “were
credible,” it was “just as likely” that the collateral assignment “could have been
placed there by anybody, and then she was sent . . . on her merry way to find
that document.” The district court was entitled to credit this alternative
explanation of the discovery of the collateral assignment in the light of the
numerous deficiencies in the document itself and the surrounding circumstantial
evidence that it was not genuine.
The district court also had another, independent ground for discounting
Alfonso’s testimony: that she was not “an unbiased witness.” Alfonso is a
former employee and current director of Maritime. She had an obvious
incentive to tailor her testimony to support Maritime’s interests. And regardless
of whether we would have regarded this incentive as sufficient to discredit
Alfonso’s testimony in the exercise of our independent judgment, the credibility
determination by the district court is binding on us. As we have explained,
“[t]he credibility of a witness is in the province of the factfinder,” and we “will
not ordinarily review the factfinder’s determination of credibility.” United
States v. Copeland, 20 F.3d 412, 413 (11th Cir. 1994).
Second, Maritime argues, based on Young v. United States ex rel. Vuitton
et Fils S.A., 481 U.S. 787 (1987), that permitting a third party to litigate on
behalf of the United States in an ancillary forfeiture proceeding is structural
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error, but this argument is a nonstarter. In Young, a plurality of the Supreme
Court concluded that the “appointment of an interested prosecutor” in a
criminal contempt proceeding is a structural error. Id. at 810. This rule does not
apply to an ancillary proceeding conducted under section 853(n) because such a
proceeding is civil in nature. See, e.g., United States v. Douglas, 55 F.3d 584,
586 (11th Cir. 1995) (“Congress therefore viewed a [section] 853(n) hearing as
a species of an ‘action at law or equity’—a substitute for separate civil litigation
against the government.”); United States v. Gilbert, 244 F.3d 888, 907 (11th
Cir. 2001), superseded by rule on other grounds as recognized in United States
v. Marion, 562 F.3d 1330 (11th Cir. 2009) (expanding Douglas to other kinds
of forfeitures). Indeed, if there were a constitutional prohibition on interested
private parties representing the United States in civil actions, the validity of
statutes such as the False Claims Act, 31 U.S.C. § 3730, would be doubtful.
Trinidad’s intervention did not affect Maritime’s “substantial rights.”
Fed. R. Civ. P. 61. Although the district court erred in permitting a foreign
sovereign with no interest of its own to litigate on behalf of the United States,
this error does not require reversal of the dismissal of Maritime’s claim.
IV. CONCLUSION
We AFFIRM the judgment in favor of the United States.
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