United States v. White

• Decision Date: 02 April 2012
• Docket Number: No. 11–1989.,11–1989.
• Citation: 675 F.3d 1073
• Parties: UNITED STATES of America, Plaintiff/Appellee, v. Robert Dean WHITE, Defendant,Robyn White, Petitioner/Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

675 F.3d 1073

UNITED STATES of America, Plaintiff/Appellee,

v.Robert Dean WHITE, Defendant,Robyn White, Petitioner/Appellant.

No. 11–1989.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 18, 2011.Filed: April 2, 2012.

Todd Haugan, on the brief, Wayzata, MN, for Petitioner/Appellant.

Surya Saxena, AUSA, on the brief, Minneapolis, MN, for Plaintiff/Appellee.

Before WOLLMAN, MURPHY, and BENTON, Circuit Judges.

WOLLMAN, Circuit Judge.

Robyn White (White) appeals the district court's ¹ dismissal of her petition seeking half the proceeds of the sale of stock that was ordered forfeited in her ex-husband's conviction for mail fraud and money laundering in connection with the Thomas Petters Ponzi scheme. We conclude that White does not allege a legal interest in the stock proceeds sufficient to confer standing, and that, even if she did, her petition fails on the merits. Accordingly, we affirm.

I.

Robert Dean White (Defendant) founded ZINK Imaging, LLC (ZINK) ² in 2005. Between approximately October 24, 2005, and January 19, 2006, Defendant invested $2,550,000 in ZINK.³ Months later, in September 2006, White was hired as a marketing consultant for ZINK. After beginning a romantic relationship with Defendant in January 2007, White no longer received compensation for her work. She alleges that she continued working for the company because Defendant orally agreed to give her one-half the increase in value of his shares of ZINK stock. White and Defendant were married on February 22, 2008.

The Federal Bureau of Investigation (FBI) conducted a raid of Thomas Petters' enterprises in September 2008, and White ceased working for ZINK that same month. On October 8, 2008, Defendant pled guilty to one count of mail fraud and one count of money laundering for his role in the Petters scheme. Defendant's entire investment in ZINK was traced by a FBI forensic accountant to transfers from Petters Company, Inc. (PCI). Defendant admitted in his plea agreement that all funds he received from PCI were proceeds of the Petters fraud. Defendant further admitted that the fraud spanned more than thirteen years, during which time he fabricated documents for the purpose of defrauding third parties into loaning PCI billions of dollars.

Defendant transferred his ZINK stock to his counsel, Joe Friedberg, “at about the time of the search warrant raid on Petters Company.” Robert White Dep. 61:9–64:19. Shortly after taking control of the ZINK stock, Friedberg received an offer of $3 million for the stock. ZINK's chief executive officer told Friedberg that if he sold the stock within the next four or five days, the purchaser would loan ZINK an additional $5 million needed to keep the company operating. Friedberg then sold the stock for $3 million and transferred the proceeds to the Receiver in the Petters bankruptcy proceeding.

On September 13, 2010, the district court ordered that all of Defendant's property derived from or traceable to the fraud be forfeited to the United States. On or about September 20, 2010, White filed for divorce from Defendant. In the divorce proceeding, White sought an award of one-half the proceeds of the ZINK stock,⁴ alleging that the proceeds were marital property under Minnesota law.

On October 13, 2010, following the entry of a preliminary order of forfeiture, which did not specifically forfeit the ZINK stock, White filed her initial forfeiture petition, in which she claimed a marital interest and “an interest similar to a quantum meruit claim” in the forfeited proceeds of the ZINK stock. The parties agreed to stay the district court's consideration of White's initial petition because the ZINK stock had not yet been specifically forfeited.

On January 6, 2011, the district court entered an order forfeiting the $3 million in proceeds from the sale of the ZINK stock. The district court concluded that the government had established the requisite nexus between the fraud and the ZINK stock proceeds to support a determination that the property was forfeitable to the United States. Thereafter, White filed an amended third-party petition, again seeking half the proceeds of the sale of stock in ZINK. White alleged in her amended petition both a marital and a contractual interest in the ZINK stock proceeds.⁵ White also claimed that the district court had erroneously forfeited the ZINK stock proceeds, alleging that “there is no nexus between” the stock and “the criminal activity upon which [Defendant] was convicted.” Amended Pet. 2–3.

On April 5, 2011, the Hennepin County District Court entered a judgment and decree in the Whites' divorce proceeding. The order adopted a stipulation between White and Defendant that awarded White one-half the proceeds from the sale of the ZINK stock. On April 19, 2011, the federal district court dismissed White's petition, finding that White could not challenge the forfeiture, that White lacked standing to claim a portion of the ZINK proceeds, and that even if she had standing, White's petition failed on the merits. Because the divorce decree was entered after both of White's petitions were filed, the district court did not consider the decree in its order. On appeal, White argues that she has a right to challenge the forfeiture, that she has standing, and that she is a bona fide purchaser for value of the ZINK stock.

II.

We review de novo a district court's grant of a motion to dismiss a forfeiture petition. See Cent. Platte Natural Res. Dist. v. U.S. Dept. of Agric., 643 F.3d 1142, 1148 (8th Cir.2011). Federal Rule of Criminal Procedure 32.2(c)(1)(A) authorizes the dismissal of a forfeiture petition “for lack of standing, for failure to state a claim, or for any other lawful reason.” For the purposes of the motion to dismiss, the facts set forth in the petition are assumed to be true. Id. “If a third party fails to allege in its petition all elements necessary for recovery, including those related to standing, the court may dismiss the petition without providing a hearing.” United States v. BCCI Holdings (Luxembourg) S.A. (Petitions of General Creditors), 919 F.Supp. 31, 36 (D.D.C.1996) (quoted with approval in Fed.R.Crim.P. 32.2 advisory committee's note to the 2000 amendments subd. (c)). “We may affirm on any basis supported by the record.” Green Tree Serv., LLC v. DBSI Landmark Towers, LLC, 652 F.3d 910, 913 (8th Cir.2011) (quoting Schoelch v. Mitchell, 625 F.3d 1041, 1046 (8th Cir.2010)).

A.

White contends that she has a right to relitigate the factual basis underlying the government's forfeiture of Defendant's ZINK stock. White argues that Defendant “obtained the subject ZINK shares prior to the infusion of said funds from PCI[.]” Appellant's Br. 13. She further contends that “PCI received in consideration for [the $2.5 million transfer to ZINK], separate shares of ZINK stock.” Id. In essence, White argues the ZINK shares of stock were not necessarily the product of Defendant's fraud.

White misunderstands the nature of an ancillary hearing. An ancillary proceeding allows White to establish her interest in the forfeited property as it compares to the interests of the government and other petitioners; it does not allow her to relitigate the nexus between the criminal acts of her ex-husband and the forfeited proceeds from the sale of the ZINK stock. United States v. Moser, 586 F.3d 1089, 1095 (8th Cir.2009). In United States v. Porchay, we concluded that “there is no provision in § 853(n) to relitigate the outcome of [the forfeiture] proceedings.” 533 F.3d 704, 710 (8th Cir.2008); see also Moser, 586 F.3d at 1095 (following Porchay ). As the district court indicated, the criminal proceedings trace the property to criminal activity, and the ancillary hearing under § 853(n) addresses “claims of ownership and priorities of interest vis-à-vis the government and the petitioners.” D. Ct. Order of April 19, 2011, at 5 (quoting Moser, 586 F.3d at 1095). Thus, White cannot challenge the district court's finding that the proceeds from the sale of ZINK stock were forfeitable to the United States; she can make her claim of ownership and priority of interest only in relation to the government and any other petitioners. See Moser, 586 F.3d at 1095.⁶

B.

White next contends that she has standing to contest the forfeiture of the ZINK stock proceeds. “Standing in forfeiture cases has ‘both constitutional and statutory aspects.’ ” United States v. Timley, 507 F.3d 1125, 1129 (8th Cir.2007) (quoting United States v. One–Sixth Share of James J. Bulger in All Present & Future Proceeds of Mass Millions Lottery Ticket No. M246233, 326 F.3d 36, 40 (1st Cir.2003) (hereinafter Mass Millions Lottery Ticket )). To establish constitutional standing, “a party seeking to challenge a forfeiture of property must first demonstrate an ownership or possessory interest in the seized property....” Id. (quoting Mass Millions Lottery Ticket, 326 F.3d at 41). An ownership interest sufficient for Article III standing “can be shown by actual possession, control, title, and financial stake.” United States v. Premises Known as 7725 Unity Avenue North, Brooklyn Park, Minn., 294 F.3d 954, 956 (8th Cir.2002). Statutory standing under § 853(n) requires that White demonstrate a legal interest in the proceeds of the ZINK stock. Timley, 507 F.3d at 1129, 1130 n. 2.

“Because a legal interest is required to bring a claim under 21 U.S.C. § 853(n)(2), a court must first look to the law of the jurisdiction that created the property right to determine whether the claimant has a valid interest.” Id. at 1129–30 (citing United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1013 (8th Cir.2003)). White claims both a contractual and a marital interest in the stock. We therefore look to Minnesota state law to determine whether White has a valid legal interest in the ZINK stock proceeds. ⁷ “If the claimant has no interest under state law, the inquiry ends, and the claim fails for lack of standing.” Timley, 507 F.3d at...