U.S. v. On Leong Chinese Merchants Ass'n Bldg.

Citation918 F.2d 1289
Decision Date14 November 1990
Docket NumberNo. 90-1191,90-1191
PartiesUNITED STATES of America, Plaintiff-Appellee, v. ON LEONG CHINESE MERCHANTS ASSOCIATION BUILDING, et al., Defendants-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Elizabeth M. Landes, Asst. U.S. Atty., Office of U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Lawrence F. Ruggiero, Siff, Rosen & Parker, New York City, John M. Beal, Chicago, Ill., for defendants-appellants.

Before CUMMINGS, CUDAHY and EASTERBROOK, Circuit Judges.

CUMMINGS, Circuit Judge.

This is an appeal of an order granting summary judgment to the United States on a civil forfeiture claim. The property ordered forfeited is the On Leong Chinese Merchants Association Building ("Building"), a three-story landmark located in Chicago's Chinatown and owned by claimant, the On Leong Chinese Merchants Association ("On Leong"). The government alleged that the Building housed an illegal gambling business, and sought forfeiture pursuant to 18 U.S.C. Sec. 1955(d). Finding that probable cause existed to believe that the Building was subject to forfeiture, the district court granted summary judgment for the government.

On appeal, claimant argues that the government failed to establish probable cause and that the district court improperly denied its motion for a stay of summary judgment proceedings on the Building. Claimant also contends that the forfeiture of real property, as opposed to personal property, is simply not authorized by 18 U.S.C. Sec. 1955(d). For the reasons set forth below, the district court's entry of summary judgment is affirmed.

I. BACKGROUND

The affidavit of F.B.I. Special Agent James Whitmer accompanied the government's verified complaint filed on June 15, 1988. According to Agent Whitmer, the Chicago Police Department discovered gambling activity at the On Leong Building on three separate occasions from 1984 to 1986. On September 2, 1984, police officers entered the Building with a warrant. They found the entrance to the second floor blocked by iron gates and equipped with a buzzer. Upon reaching the second floor, they observed people playing the Chinese gambling game of Fan-Tan. The officers arrested sixteen individuals and confiscated chips, buttons, dice, and an unspecified amount of currency. On February 22, 1985, officers entered forcibly with a warrant after being refused entry to the second floor. Eleven Fan-Tan players were arrested. Police recovered over $30,000 in chips and $3,805 in currency from the players and from a safe located in the adjacent cashier's room. On March 14, 1986, the officers again entered the Building with a warrant. This time they discovered gambling in the basement. They arrested eighteen people and seized currency, chips, Fan-Tan playing pieces, and two Fan-Tan cloths. The Chicago Police charged those arrested on all occasions with, inter alia, violations of Sections 28-1 and 28-3 of Chapter 38 of the Illinois Revised Statutes. 1 Copies of police reports were filed with the district court, attached as exhibits to Agent Whitmer's affidavit.

The F.B.I. also subsequently raided the On Leong Building. F.B.I. Special Agent George Ng, who later filed his own affidavit, observed and participated in gambling games in the Building while working undercover. On April 19, 1988, after passing through a door equipped with an electronic buzzer and a closed circuit television camera, he climbed to the second floor. There he observed the Chinese games of Fan-Tan and Pai Gow being played at separate tables. At least 50 bettors or spectators were present. Bettors wagered as much as $3,000 and $4,000 at the Pai Gow table. Agent Ng, who speaks fluent Mandarin Chinese, purchased $500 in chips from a cashier. He placed bets, receiving 90% of his winnings from a banker at the Fan Tan table. The house kept the remaining 10%. He was present during a shift change in which six new workers replaced four workers at the Fan Tan table and two at the Pai Gow table.

Agent Ng returned on the following evening, April 20, 1988, with Agent Whitmer. The two executed a federal search warrant and interrupted similar gambling activity. One hundred people were present at the time of the search. The agents confiscated over $300,000 in currency, chips worth over $75,000, video equipment, and gambling paraphernalia. Agent Ng later identified three of those present at the raid as corporate officers of the On Leong Chinese Merchants Association. One of the officers, Chi Chak Leung, had served as the cashier of the gambling operation, and another, Henry H. Fong, had supervised the floor.

The government filed a forfeiture complaint pursuant to 18 U.S.C. Sec. 1955(d), which forbids the use of property for illegal gambling activities. Count I sought the forfeiture of the defendant real property, and Count II sought forfeiture of the currency, chips, and equipment seized in the April 20, 1988 raid. On Leong filed a claim to the Building and other seized property on June 24, 1988. The government subsequently moved to stay discovery with respect to the forfeiture action because of a concurrent, related criminal investigation. After this motion was granted and discovery was stayed, the government moved for summary judgment with respect to all the property. On Leong responded by asking for a stay of summary judgment proceedings. The parties agreed to a continuance of the summary judgment motion for all seized property except the Building. The district court denied the claimant's motion for a stay with respect to the Building and granted the government's summary judgment motion, ordering the forfeiture of the Building. Claimant later filed a Petition for Mitigation of Forfeiture addressed to the Attorney General, who is empowered to mitigate or remit a forfeiture. See 19 U.S.C. Sec. 1618; 28 C.F.R. Sec. 9.1-9.7. That petition is still pending. Claimant also filed a timely notice of appeal. Execution of the district court forfeiture decree has been stayed pending this appeal.

II. DISCUSSION
A. Probable Cause Showing

18 U.S.C. Sec. 1955 is a federal anti-gambling statute. Subsection (d) of that statute pertains to forfeiture and authorizes the seizure of "any property, including money, used in violation of the provisions of this section...." 2 Subsection (b)(1) defines an "illegal gambling business" as:

a gambling business which--

(i) is a violation of that law of a State or political subdivision in which it is conducted;

(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

(iii) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

18 U.S.C. Sec. 1955(b)(1).

Claimant argues that forfeiture is improper because the government failed to prove one of the elements of an "illegal gambling business," namely the underlying state law violation. On Leong does not challenge the government's proof of elements (ii) and (iii) of 18 U.S.C. Sec. 1955(b)(1).

The government's burden in a civil forfeiture case is merely to establish probable cause to believe that the defendant property is subject to forfeiture. In this case, the government needed to show probable cause to believe that the Building housed an "illegal gambling business." Probable cause is defined as "reasonable ground for the belief of guilt supported by less than prima facie proof but more than mere suspicion." United States v. Three Hundred Sixty Four Thousand, Nine Hundred Sixty Dollars etc., 661 F.2d 319, 322-323 (5th Cir.1981). Of course, probable cause must be demonstrated with respect to "every essential element" of the alleged violation. United States v. Arias, 575 F.2d 253, 254 (9th Cir.1978), certiorari denied, 439 U.S. 868, 99 S.Ct. 196, 58 L.Ed.2d 179. Once the government demonstrates probable cause in a forfeiture case, the ultimate burden shifts to the claimant to prove by a preponderance of the evidence that the property is not subject to forfeiture. 19 U.S.C. Sec. 1615; United States v. Edwards, 885 F.2d 377 (7th Cir.1989). Summary judgment ordering forfeiture is appropriate when the government establishes probable cause and the claimant fails to show that the facts constituting probable cause did not exist. United States v. Little Al, 712 F.2d 133 (5th Cir.1983); United States v. Premises Known as 3639-2nd St., N.E., 869 F.2d 1093 (8th Cir.1989).

Claimant challenges the method by which the government established probable cause on the "state law violation" element of 18 U.S.C. Sec. 1955(b)(1). Claimant interprets the statute to require the government to implicate the claimant in running an illegal business and to charge participants, at a minimum, with violations of state gambling laws. Under claimant's theory, the government failed to establish probable cause to believe that an "illegal gambling business" existed on the F.B.I. raid of April 20, 1988, because though On Leong members were present on those days and managed aspects of the gambling, no arrests were made. Similarly, the earlier Chicago police raids supposedly failed to uncover an "illegal gambling business" because no On Leong member was present at any of the first three searches, though gamblers were arrested at those searches for violating state laws.

On Leong's argument is overly formalistic. First the presence or involvement of the claimant is simply immaterial under the statute. The language of 18 U.S.C. Sec. 1955(d) does not condition forfeiture on any suggestion that the claimant itself directed or managed the illegal gambling operation. It authorizes the forfeiture of "any property ... used in violation of the provisions of this section." 18 U.S.C. Sec. 1955(d) (emphasis added). Though one of the preceding subsections does make it illegal to "conduct, finance, supervise, direct, or own all or part of an illegal...

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