United States v. Joseph Harold Gandy

• Court: Court of Appeals for the Eleventh Circuit
• Decided: June 10, 2021
• Docket: 20-13048
• Status: Unpublished

Opinion

USCA11 Case: 20-13048 Date Filed: 06/10/2021 Page: 1 of 4

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 20-13048 ________________________

D.C. Docket No. 2:14-cr-00319-KOB-SGC-1

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

DIAMOND DEALER, LLC, LEVY’S FINE JEWELRY, XL SPECIALTY INSURANCE COMPANY,

Interested Parties - Appellees,

versus

LAZARE KAPLAN INTERNATIONAL INC.,

Interested Party - Appellant. ________________________

Appeal from the United States District Court for the Northern District of Alabama ________________________

(June 10, 2021)

Before JORDAN, BRASHER, and JULIE CARNES, Circuit Judges. USCA11 Case: 20-13048 Date Filed: 06/10/2021 Page: 2 of 4

PER CURIAM:

This appeal asks us to determine who owns jewelry that Joseph Gandy

reported stolen from his Alabama jewelry store in 2004. At the time of the reported

theft, Lazare Kaplan International had consigned several of these pieces to Gandy to

sell. After Gandy reported the theft, his insurance company, XL Specialty Insurance,

interpleaded $2.6 million into district court and joined all relevant parties. Under a

consent judgment in that action, Lazare received $995,000 “in full satisfaction and

discharge of any and all claims against any past or present party to this action.” XL

made similar payments to other similarly affected parties.

About a decade later, someone used some of the stolen jewelry as collateral

to secure loans from Levy’s Fine Jewelry and The Diamond Dealer, LLC. Law

enforcement opened an investigation and discovered that Gandy had staged the theft

and kept the jewelry. Accordingly, the United States prosecuted Gandy for money

laundering, and he pleaded guilty. The United States filed an action to forfeit the

jewelry and four parties filed claims: Lazare, XL, Levy’s, and Diamond Dealer.

Gandy consented to a forfeiture, and the United States did not contest the

claims of any third-party claimant. The district court resolved the dispute between

the third parties by holding, among other things, that (1) Lazare had no present

interest the property because it had accepted $995,000 in insurance proceeds in

satisfaction of its claims, (2) XL had an interest in the property because it had

2 USCA11 Case: 20-13048 Date Filed: 06/10/2021 Page: 3 of 4

provided the insurance proceeds, (3) Levy’s and Diamond Dealer had superior

interests as to the specific jewelry that they had acquired as collateral. Accordingly,

the district court awarded the property to XL, Levy’s, and Diamond Dealer.

Lazare appealed. It argues that its interest in the property is superior to the

interests of XL, Levy’s, and Diamond Dealer. It also argues that XL has no legal

interest and that XL’s petition was improperly filed.

This Court reviews “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. Mar. Life Caribbean Ltd., 913 F.3d 1027, 1032 (11th Cir.

2019). A third party may be awarded property in a forfeiture action only it if “has a

legal right, title, or interest” in the property. See 21 U.S.C. § 853(n)(6)(A). If a third

party has no legal interest in the property, then it lacks statutory standing to file a

petition in the forfeiture action. See 21 U.S.C. § 853(n)(2).

We conclude that the district court correctly held that Lazare has no interest

in the property because Lazare gave up its claim to the property in the interpleader

action. When Lazare accepted $995,0000 as part of the consent judgment in the

interpleader action, it released its claims against Gandy arising from the loss of the

items that Gandy had on consignment. Under Alabama law, “payment to the owner

of property wrongfully taken from him of a judgment in his favor for its value is

given the effect of a purchase of property by the defendant in the judgment.” Cresent

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News & Hotel Co. v. Hines, 61 So. 9, 10 (Ala. Civ. App. 1913). See also 16 Couch

on Insurance § 226:135 (“An insurer may . . . recover stolen property that has been

reacquired by the insured”). Accordingly, Lazare no longer has an interest in the

property.

Because Lazare has no present interest in the property, we need not address

its arguments about XL’s petition. Similarly, we need not address any dispute about

the jewelry claimed by Levy’s or Diamond Dealer.

The district court’s judgment is AFFIRMED.