United States v. Kramer

912 F.2d 1257, 1990 WL 128225
CourtCourt of Appeals for the Eleventh Circuit
DecidedSeptember 7, 1990
DocketNo. 90-5431
StatusPublished
Cited by11 cases

This text of 912 F.2d 1257 (United States v. Kramer) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Kramer, 912 F.2d 1257, 1990 WL 128225 (11th Cir. 1990).

Opinion

CLARK, Circuit Judge:

MEMORANDUM OPINION

This appeal is being heard on an expedited basis. Oral argument was held on August 27, 1990. To insure no further delay, we issue a memorandum opinion. We conclude that claimants1 in this forfeiture proceeding were entitled to an evidentiary hearing and order within thirty days of the government’s seizure of the property in question. None of the claimants had been convicted pursuant to 18 U.S.C. § 1963(a) (1988), nor had an indictment been issued against them.

Because no hearing has been conducted, the facts recited by the court are taken from the briefs and do not represent opinions of the court. The court retains jurisdiction of the case.

I. Background

Appellants bring this appeal from an order of the district court imposing various restraints on their property following an order of forfeiture pursuant to 18 U.S.C. § 1963. Because the background of this case is both intricate and crucial to this court’s order, a brief excursion into the factual circumstances is appropriate.

Claimants are general and limited partners of LCP Associates, Ltd. (“LCP”) which entered into a joint venture with another entity to build, develop, and manage a card club casino known as the Bell Gardens Bicycle Club (“Club”).2 They have never been indicted or tried for the offenses at issue in the underlying criminal proceeding. The record shows that the Club is a substantial affair with an estimated net value of $150 million, over 2,000 employees, and monthly proceeds to the claimants of over $1 million a month.

[1259]*1259In December, 1988, a grand jury returned a superseding indictment against four defendants — only one of whom is before this court as an appellant — alleging various violations of the RICO statute, the Travel Act, and the Internal Revenue Code. . Specifically, the indictment alleged that these criminal defendants, Benjamin Barry Kramer, Melvyn Kessler, Jack Jerome Kramer, and Michael Gilbert, had engaged in a scheme of laundering money derived from marijuana trafficking by transferring these funds to a sham offshore entity set up by the criminal defendants as a legitimate lending firm. The tainted money would then be available to be loaned to entities in the United States to finance projects, thereby closing the circle on the laundering scheme. On the forfeiture count, the superseding indictment alleged that the criminal defendants held possession of the Club and other property with a cash value of at least $50 million that constituted or derived from the proceeds of racketeering activity and therefore was forfeitable under 18 U.S.C. § 1963(a)(3).

At trial, the portion of the government’s case relevant here rested on the theory that approximately $12 million of the initial $22 million used to construct the Club was funded from the illicit gains of criminal defendants’ marijuana trafficking laundered through the foreign entity.3 By the time the Club began operation in November 1984, only one of the defendants, Michael Gilbert, had an ownership interest in the Club. The other criminal defendants, however, did retain their lender’s rights of repayment of principal plus interest and a participation in the Club’s profits through their offshore entity. In late 1986, the Club refinanced the $12 million loan through a conventional commercial bank and paid off the remaining balance due to the offshore entity.

In late March and early April of 1990, the jury returned guilty verdicts against the criminal defendants on various substantive counts. On April 2 and 3, the jury also returned special verdicts of forfeiture against the Kramers and Michael Gilbert which found that the Club was the proceeds of their racketeering activity. At an impromptu hearing on April 3, 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. At this hearing, claimants, who were statutorily barred from intervening in the criminal trial, see 18 U.S.C. § 1963(i)(1), unsuccessfully registered objections to the proposed order of forfeiture and restraining order.

Prior to or on April 27, all but two claimants filed verified petitions asserting claims to the Club. The remaining claimants filed verified claims after April 27. The claimants also petitioned for relief from or stay of the restraining orders and filed supporting affidavits. At a hearing on April 27, claimants reiterated their previous objections to the forfeiture and restrictions earlier imposed on the Club. The district court, however, 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(Z).

II. Discussion

We note initially that this court has jurisdiction to hear this appeal under its authority to review the propriety of any injunctive relief. See 28 U.S.C. § 1292(a)(1) (1988). Although the restraints were imposed here with a minimum of process, their indeterminate length and the statutory requirement under § 1963(Z)(4) of a timely hearing indicate that restraining orders issued pursuant to § 1963(e) have all the indicia of a traditional injunction for purposes of appellate review. See United States v. Gelb, 826 F.2d 1175, 1176 (2d Cir.1987); McDougald v. Jenson, 786 F.2d 1465, 1472 (11th Cir.), cert. denied, 479 U.S. 860, 107 S.Ct. 207, 93 L.Ed.2d 137 (1986). Because the district court in this case has not conducted this hearing re[1260]*1260quired by the statutory scheme, we have authority to review appellants’ claims.

Under the criminal forfeiture provisions of the RICO statute, a third party, who claims a legal interest in property forfeited under § 1963(a) in a criminal proceeding, has the sole remedy of petitioning the district court for a hearing to adjudicate the validity of his alleged interest in the property. 18 U.S.C. § 1963(i). Upon a third party’s timely petition for such review, the district court is commanded to hold a hearing within thirty days “to the extent practicable and consistent with the interests of justice.” 18 U.S.C. § 1963(1 )(4).

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912 F.2d 1257, 1990 WL 128225, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-kramer-ca11-1990.