Assets of Martin, In re
| Decision Date | 27 August 1993 |
| Docket Number | No. 93-1201,No. 93-1189,93-1201,Nos. 93-1189,93-1189,s. 93-1189 |
| Citation | 1 F.3d 1351 |
| Parties | In re ASSETS OF Myles MARTIN, et al., Gerald D. Ditursi, David Savage, Robert Self, Jr., Bruce Ebert, William Selvagn, Self Oil Heat, Inc., Global Enterprises, Inc., Bell Fuel Corporation, Bell Fuels T/A Asco, Inc., Atlantic Oil & Heat Co., Par Sales, Inc., Asca, Inc./Nova Petroleum and Omni Petroleum. Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc., Appellants inGerald D. DiTursi, Appellant in |
| Court | U.S. Court of Appeals — Third Circuit |
Morvillo, Abramowitz, Grand, Iason & Silberberg, Catherine M. Foti (argued), Robert B. Buehler, New York City, for appellants Jacob Dobrer, Vyacheslav Dobrer and N.W.R. Enterprises, Inc.
Rose & Koerner, Ronald D. Rose (argued), Brooklyn, NY, for appellants Grast, Inc. and American Enterprises, Inc. Law Office of Barry A. Cohen, Barry A. Cohen, Martinez & Kessler, Victor D. Martinez (argued), Bruce J. Kessler, Tampa, FL, for appellant Gerald D. DiTursi.
Michael J. Rotko, U.S. Atty., E.D.Pa., Sonia C. Jaipaul, Asst. U.S. Atty., Chief, Financial Litigation Div., Joel M. Friedman, Asst. U.S. Atty., Chief, Organized Crime Strike Force, Mary E. Crawley, Asst. U.S. Atty., Robert E. Courtney, Asst. U.S. Atty., Pamela Foa (argued), Asst. U.S. Atty., Philadelphia, PA, for appellee.
Before: GREENBERG, NYGAARD and ROSENN, Circuit Judges.
The penalty provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-1968, provide upon conviction for mandatory forfeiture of assets related to the criminal enterprise. 18 U.S.C. Sec. 1963(a). The statute also provides, 18 U.S.C. Sec. 1963(m), that certain substitute assets may be forfeitable upon conviction if assets related to the criminal enterprise are not available. The district courts are authorized by 18 U.S.C. Secs. 1963(d)(1)(A) and 1963(d)(1)(B) to impose, respectively, pre-conviction and pre-indictment restraints to preserve the availability of Section 1963(a) forfeitable assets. Here, we must determine whether the RICO forfeiture provisions also permit pre-conviction and pre-indictment restraints to preserve the availability of substitute assets. 1 From the plain language of the statute, whose meaning is supported by legislative history, we conclude, contrary to the district court, that restraints to preserve the availability of substitute assets cannot be imposed prior to conviction. However, because of the district court's understandably expedited treatment of this case, it is unclear whether restraints may be issued here on the basis of the assets' connection to the alleged criminal enterprise rather than their status as substitute assets. We therefore will vacate the order of the district court and will remand the case for reconsideration of that issue and for further proceedings consistent with this opinion.
This case arises from the government's investigation of "daisy chain" schemes to evade federal and state excise taxes on diesel fuel. The same product, number 2 fuel oil, is used as home heating oil and diesel motor fuel. Number 2 fuel oil used as home heating oil is not subject to federal or state excise taxes; however, these taxes are imposed when it is sold as diesel motor fuel. This state of affairs encourages "daisy chain" operators to buy untaxed heating oil and pass it through various entities, some existing only on paper, to obscure responsibility for payment of excise taxes. The product eventually is sold to retailers as diesel fuel, without the payment of applicable excise taxes. The "daisy chain" operators can undercut legitimate wholesalers' prices and make inordinate profits by pocketing the amounts that should have been paid as taxes.
These consolidated appeals were brought by Gerald DiTursi (No. 93-1201) and jointly by Jacob Dobrer, Vyacheslav Dobrer, N.W.R. Enterprises, Inc., Grast, Inc., and American Enterprises, Inc. (No. 93-1189). DiTursi, other individuals, and several companies in the wholesale and retail heating-oil and fuel-oil businesses, were investigated during 1991 and 1992 by the Federal Bureau of Investigation and Internal Revenue Service, on suspicion of operating a "daisy chain." The investigation included extensive court-approved wiretaps of DiTursi's conversations about fuel-oil transactions. By late November 1992, the government was ready to execute search warrants on the oil businesses, the residences of DiTursi and other implicated persons, and the New York City offices shared by Grast, Inc. and American Enterprises, Inc., corporations implicated in the scheme. (The government was not yet aware that a third corporation, N.W.R. Enterprises, Inc., was doing business out of the same offices as Grast and American Enterprises; it learned of N.W.R. when agents executed the warrants.)
The government did not want the targets of the investigation to dissipate or hide assets that might become forfeitable under RICO. Therefore, in anticipation of executing the search warrants, the government sought an ex parte temporary restraining order pursuant to RICO, 18 U.S.C. Sec. 1963(d)(2), to preserve the availability of assets of DiTursi, five other individuals, and eight fuel companies. The district court granted the ex parte order on November 23, 1992; the search warrants were then executed on November 24, 1992. On November 25, the government obtained an amended ex parte order to preserve the availability of additional assets discovered during the searches. On December 3, 1992, the government obtained a further ex parte restraint directed to assets of Grast, American Enterprises, N.W.R., and certain principals and owners of those corporations, i.e., Jacob Dobrer, Vyacheslav Dobrer, and David Shuster. The government then moved for a pre-indictment preliminary injunction pursuant to Section 1963(d)(1)(B). To preserve the existing ex parte restraints pending the preliminary injunction hearing, the government obtained an order of extension for good cause shown.
The court conducted the hearing on the Section 1963(d)(1)(B) pre-indictment injunction application on February 11, 1993. The government introduced as exhibits, inter alia, records of fuel-oil transactions seized at the New York offices of Grast, American Enterprises, and N.W.R.; bookkeeping records of those companies; and copies of newspaper articles concerning state law-enforcement agencies' investigations of fuel-oil "daisy chains," which had been found in a file at the Grast/N.W.R./American Enterprises offices. The government also introduced affidavits of the investigating agents and presented oral testimony from FBI agent John J. Terry. The subjects of the restraints presented exhibits in support of their contention that Grast, N.W.R., and American Enterprises had bona fide sources of income from their legitimate businesses of exporting consumer goods to Russia and Europe generally. The attorneys for the subjects cross-examined Terry extensively, but did not present any witnesses.
On February 12, 1993, the district court, ruling from the bench, granted the government's motion for an order enjoining removal, sale, or dissipation of the subjects' assets. (J.A. 643-661). While recognizing that its authority to do so was not settled by any decision of the Supreme Court or of this court, the district court held that it could "restrain substitute assets [as defined in Section 1963(m) ] in the pre-indictment stage, so long as the property restrained does not exceed the profits from the enterprise." (J.A. 646). The district court also rejected DiTursi's argument that his Sixth Amendment right to counsel precluded restraint of his substitute assets. (J.A. 657). The court entered an order enumerating the restraints on February 17, 1993. (J.A. 662-670). Jacob Dobrer, Vyacheslav Dobrer, N.W.R., Grast, and American Enterprises jointly appealed from that order on February 24, 1993, and DiTursi appealed on February 26, 1993. As a matter of convenience we will refer to the order of February 17, 1993, as having entered restraints, though it would be technically correct to consider it as having entered a preliminary injunction.
Thereafter on March 26, 1993, a grand jury in the Eastern District of Pennsylvania indicted two of the appellants, DiTursi and Jacob Dobrer, as well as numerous other persons and certain entities, by reason of the "daisy chain" scheme. 2 (Government's Supplemental App. at 1-169). Whereas the government had represented at the February 11th hearing, and the district court had found, that potential forfeitable profits from the alleged RICO scheme were in excess of $15 million (J.A. 646), the RICO forfeiture counts of the indictment allege the substantially smaller sum of $6,196,242.98 as forfeitable assets. (Government's Supplemental App. at 112, 119, 126).
The government has raised four challenges to our jurisdiction: (1) as to the appellants who have been indicted, DiTursi and Jacob Dobrer, the order of February 17, 1993, is interlocutory and thus non-appealable; (2) the order has expired as to the unindicted appellants, Vyacheslav Dobrer, American Enterprises, Inc., Grast Inc., and N.W.R. Enterprises, Inc., and their appeals are therefore moot; (3) because David Shuster, 3 DiTursi, and Jacob Dobrer have been indicted, the restraints under Section 1963(d)(1)(B) on their assets have been continued pursuant to Section 1963(d)(1)(A), which provides for pre-conviction restraints, so that the appellants' claims are moot; and (4) Jacob Dobrer is a fugitive and thus is precluded from appealing by the fugitive disentitlement doctrine. We find the first three objections to be without merit. However, we conclude that the government's contention with respect to Jacob Dobrer...
To continue reading
Request your trial
-
U.S. v. Rodriguez
... ... § 5317(c)(1)(A). The forfeiture allegation noted the Government's intent to seek forfeiture of substitute assets in the event it could not locate the currency involved in the offense because Defendant had transferred, dissipated, placed beyond the jurisdiction ... In re Assets of Martin, 1 F.3d 1351, 1360 (3d Cir.1993) ("Congress intended to exclude substitute assets from the property subject to preliminary restraints"). After ... ...
-
U.S. v. Yusuf
... ... 9 For example, the fraudulent concealment of a bankruptcy estate's assets is categorized as a "specified unlawful activity." See 18 U.S.C. §§ 1956(c)(7)(A), 152(1) (criminalizing the concealment of assets relating to § ... Macchia, 35 F.3d 662, 665-66 (2d Cir.1994); United States v. Victoria-21, 3 F.3d 571, 573 (2d Cir.1993); In re Assets of Martin ... ...
-
U.S. v. Morelli
... ... Macchia, 35 F.3d 662, 665-66 (2d Cir.1994); United States v. Victoria-21, 3 F.3d 571, 573 (2d Cir.1993); In re Assets of Martin, 1 F.3d 1351, 1353 (3d Cir.1993); United States v. Tarricone, 996 F.2d 1414, 1416-17 (2d Cir.1993); United States v. Aracri, 968 F.2d ... ...
-
U.S. v. Kirschenbaum
... ... But the government has charged him with fraud and money laundering, and, pending trial, has seized about $20 million in assets. Mr. Kirschenbaum brings this interlocutory appeal challenging the district court's restraining order that seized the assets that the indictment ... United States v. Musson, 802 F.2d 384, 385 (10th Cir.1986); but see In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir.1993) (concluding restraining order under § 18 U.S.C. § 1963(e)(1) was appealable under 28 U.S.C. § 1292(a)(1) as an ... ...
-
Racketeer influenced and corrupt organizations.
...immediate appeal may be taken from interlocutory order granting injunction under 28 U.S.C. [section] 1292(a)(1)); In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir. 1993) (holding pretrial asset-restraint orders are subject to immediate appeal as "injunctions" under 28 U.S.C. [section] 1292......
-
Racketeer influenced and corrupt organizations.
...immediate appeal may be taken from interlocutory order granting injunction under 28 U.S.C. [section] 1292(a)(1)); In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir. 1993) (holding pretrial asset-restraint orders are subject to immediate appeal as "injunctions" under 28 U.S.C. [section] 1292......
-
Racketeer influenced and corrupt organizations.
...immediate appeal may be taken from interlocutory order granting injunction under 28 U.S.C. [section] 1292(a)(1)); In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir. 1993) (holding pretrial asset-restraint orders are subject to immediate appeal as "injunctions" under 28 U.S.C. [section] 1292......
-
Review Proceedings
...F.3d 68, 77, 80 (2d Cir. 2008) (appeal dismissed because defendant remained fugitive during appellate process); In re Assets of Martin, 1 F.3d 1351, 1356-57 (3d Cir. 1993) (same); U.S. v. Corporan-Cuevas, 35 F.3d 953, 957 (4th Cir. 1994) (same); U.S. v. 2005 Pilatus Aircraft, 838 F.3d 662, ......