Clifford v. U.S.
| Decision Date | 17 February 1998 |
| Docket Number | No. 96-5317,96-5317 |
| Parties | Clark M. CLIFFORD and Robert A. Altman, Appellants, v. UNITED STATES of America, et al., Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Timothy J. Preso, Washington, DC, argued the cause for appellants, with whom William H. Jeffress, Jr., Martin D. Minsker and Douglas F. Curtis were on the briefs.
Marc J. Gottridge, New York City, argued the cause for appellees, with whom Sol Neil Corbin, New York City, Stephen J. Brogan, Eric L. Lewis and Michael Nussbaum, Washington, DC, were on the brief for appellees First American Bankshares, Inc., et al.
Mary Lou Leary, U.S. Attorney, Washington, DC, at the time the brief was filed, Michele L. Crawford, Trial Attorney, and Stefan D. Cassella, Assistant Chief, U.S. Department of Justice, were on the brief for appellee United States of America.
Before: WILLIAMS and ROGERS, Circuit Judges and BUCKLEY, Senior Circuit Judge.
Appellants, Clark M. Clifford and Robert A. Altman, appeal an order of the district court denying access to certain sealed documents and transcripts of in camera conferences between the judge and a court-appointed trustee in the course of an ongoing criminal forfeiture proceeding. Appellants are not party to that proceeding, but are involved in several civil actions pending before the same judge as adversaries to the parties appearing in the criminal matter. Appellants contend that the communications between the trustee and the judge relate to their concurrent civil cases and that due process requires that they be notified and provided with copies of any such communications. Because appellants have failed to provide sufficient evidence to overturn the district court's finding that the submitted information did not involve matters directly related to the civil litigation, and because their other grounds for access to the sealed documents, rooted in the equitable principles of trust law, are unpersuasive, we affirm.
This appeal involves a subsidiary dispute arising out of the lengthy and ongoing legal proceedings involving the Bank of Credit and Commerce International ("BCCI") and the related activities of its officers, directors, and shareholders. Suffice it to say for purposes of the instant appeal that BCCI pled guilty to several state and federal charges, including conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act ("RICO") by illegally acquiring a controlling interest in First American Bankshares, Inc. ("FAB") and First American Corporation ("FAC") (collectively "First American"). See 18 U.S.C. § 1962(c), (d) (1988). As a result, pursuant to an agreement between BCCI and the United States, the district court ordered the forfeiture of all of BCCI's property in the United States, including whatever interest it may have had in First American. As relevant here, the court ordered the forfeiture of "the net proceeds from the future sale or other disposition or transfer of any stock, security or other interest in First American Bankshares, Inc., but not the stock, security or other interest itself."
Executing this forfeiture agreement proved to be complicated due to the nature of the conspiracy. BCCI did not directly own any interest in First American. Rather, through intermediaries, it acquired a controlling interest in a Netherlands Antilles corporation, Credit and Commerce American Holdings, Inc. ("CCAH"). The extent of this interest was uncertain at the time of the forfeiture order but has been subsequently calculated to amount to 61.156%. Other shareholders in CCAH included appellants Clifford and Altman, whose shares have been estimated at 0.828% and 0.414% respectively. In turn, CCAH owned a subsidiary corporation, Credit and Commerce American Investment ("CCAI"), which owned FAC, which owned FAB.
Faced with this tangle of interlocking subsidiary corporations, the United States decided that the best course for recovering its forfeited interest was to dissolve First American and liquidate its assets. To facilitate the process, the government proposed the appointment of a trustee under 18 U.S.C. § 1963(e) and developed a plan whereby CCAH would transfer all of its interest in First American to the trustee, who would "have all rights, titles, powers, and privileges of a shareholder of FAC, including ... the right to exercise exclusively any and all voting rights and any other rights or benefits attached to ... the FAC shares." According to the plan, once the trustee completed the sale of First American, the district court would order the equitable distribution of the net proceeds (after payment of expenses) to the United States and any outstanding shareholders of CCAH. 1 Because BCCI was not the sole shareholder of CCAH, the government needed to win the approval of others to muster the 75% share vote necessary for the plan to take effect, and on May 12, 1992, CCAH's shareholders, including Clifford and Altman, approved the proposed transaction. Subsequently, the district court appointed a trustee and required him to prepare quarterly progress reports.
The trustee successfully completed the sale of First American's assets, and in October 1994 filed a motion seeking a "Procedural Order" on the procedures he should follow in dissolving the corporation, completing its liquidation, and distributing the proceeds. Following a public hearing on December 19, 1994, the court, by order dated two days later, directed the trustee to obtain lists of all proceedings and claims against First American, the amounts estimated as appropriate to reserve for payment for each, and estimated associated expenses, and to file these documents under seal.
Meanwhile, several civil lawsuits involving appellants Clifford and Altman began to unfold. Appellants had served in various capacities for BCCI prior to its legal difficulties. In addition to owning shares in CCAH, they had also served as directors and officers of CCAH, CCAI, and First American and as legal counsel for BCCI and First American. On June 24, 1993, the trustee, on behalf of First American, filed suit against several defendants, including Clifford and Altman, for their participation in the acquisition of First American by BCCI, alleging violations of RICO, common law fraud, breach of fiduciary duty, and conspiracy. See First Am. Corp. v Al-Nahyan, No. 93-1309 (D.D.C. filed June 24, 1993). Similarly, on July 1, 1994, BCCI's fiduciaries filed suit alleging that Clifford and Altman (as well as their former law partners) had breached their fiduciary duties and improperly represented both BCCI and First American during their financial dealings despite conflicts of interest. See BCCI Holdings, S.A. v. Clifford, 964 F.Supp. 468 (D.D.C.1994). Both lawsuits are currently pending before the same judge who is presiding over the criminal forfeiture proceedings.
Appellants have also filed several civil lawsuits of their own. In March 1995, appellants filed a claim in the federal court in the Eastern District of Virginia for indemnification from First American. See Clifford v. First Am. Corp., No. 95-377-A (E.D. Va. filed Mar. 24, 1995). They sought reimbursement, as officers and directors of First American, for legal fees incurred in the successful defense of criminal charges that had been brought against them in New York. 2 This lawsuit was ultimately transferred to the District Court for the District of Columbia and assigned to the same judge. See Clifford v. First Am. Corp., No. 95-877 (D.D.C. filed May 10, 1995). In September 1995, appellants filed another indemnification suit in federal court here against First American, seeking reimbursement for the defense of the civil claims brought against them by BCCI and First American and an administrative action being pursued by the Federal Reserve Board. See Clifford v. First Am. Corp., No. 95-1689 (D.D.C. filed Sept. 5, 1995). That lawsuit has been stayed pending the outcome of the other civil lawsuits currently before the district court.
In the instant case, appellants filed a motion on November 13, 1995, to intervene in the criminal proceeding against BCCI for the "limited purpose of obtaining disclosure of information that has been communicated to [the district court] by parties ... [or] the First American Trustee ... and that may be communicated in the future." Asserting that several communications between the trustee and the judge in the course of the forfeiture proceedings related to their concurrent civil litigation, appellants requested notes of a November 16, 1992, in camera discussion among the judge, the trustee, and counsel for both BCCI's fiduciaries and the United States. 3 This off-the-record conference was prompted by remarks made by counsel for the BCCI fiduciaries that he wished to discuss "a future piece of litigation." Appellants maintain that this remark, as well as other statements made by the prosecutor, were meant to refer to the Al-Nahyan action and the BCCI suit that was later filed against them.
Appellants also object to their lack of access to certain material contained in a sealed report filed by the trustee in July 1995. 4 Pursuant to the Procedural Order, the trustee submitted a "Report on the First List of Claims and Contingencies of First American" containing a list of pending legal proceedings and claims asserted against the corporation, including the various actions involving appellants. This document, placed in the public record and obtained by appellants, referred to another report filed under seal with the court at the same time that included First American's "Reserve Lists" and "Expense and Indemnity List" as required by the Procedural Order. Upon reviewing the public report, appellants requested a copy of the sealed document from the trustee. When their request was refused, appellants moved to intervene in the criminal proceeding to gain...
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Farrell v. Hellen
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First American Corp. v. Al-Nahyan, Civ.A. No. 93-1309(JHG).
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