Forfeiture Hearing As to Caplin & Drysdale, Chartered, In re

• Decision Date: 11 January 1988
• Docket Number: No. 86-5050,86-5050
• Citation: 837 F.2d 637
• Parties: In re FORFEITURE HEARING AS TO CAPLIN & DRYSDALE, CHARTERED, Claimant, UNITED STATES of America, Plaintiff-Appellant, v. CAPLIN & DRYSDALE, CHARTERED, Claimant-Appellee, and Christopher F. Reckmeyer, II; Robert Bruce Reckmeyer, Defendants, National Association of Criminal Defense Lawyers (NACDL); National Legal Aid and Defender Association (NLADA); and American Bar Association (ABA); Amici Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 637

837 F.2d 637

56 USLW 2411

In re FORFEITURE HEARING AS TO CAPLIN & DRYSDALE, CHARTERED, Claimant UNITED STATES of America, Plaintiff-Appellant, v. CAPLIN & DRYSDALE, CHARTERED, Claimant-Appellee and Christopher F. Reckmeyer, II; Robert Bruce Reckmeyer, Defendants National Association of Criminal Defense Lawyers (NACDL) National Legal Aid and Defender Association (NLADA); and American Bar Association (ABA); Amici Curiae.

No. 86-5050.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 6, 1987.

Decided Jan. 11, 1988.

Samuel Rosenthal, Chief, Appellate Section, Crim. Div., Dept. of Justice, Washington, D.C., for plaintiff-appellant.

Peter Van Norden Lockwood, Washington, D.C., for claimant-appellee.

Eugene C. Thomas, President, American Bar Ass'n, Boise, Idaho, Charles G. Cole, Steven H. Goldblatt, Terrance G. Reed, Washington, D.C., on brief, for amicus curiae American Bar Ass'n.

Peter Cohen, Washington, D.C., on brief for amicus curiae Nat. Legal Aid and Defender Ass'n.

Leonard Stamm, Maryland Crim. Defense Attys. Ass'n, Neal R. Sonnett, Benedict P. Kuehne, Bierman, Sonnett, Shohat & Sale, P.A., Miami, Fla., on brief for amicus curiae Nat. Ass'n of Crim. Defense Lawyers and the Maryland Crim. Defense Attys. Ass'n.

Before WINTER, Chief Judge, and RUSSELL, WIDENER, HALL, PHILLIPS, MURNAGHAN, SPROUSE, ERVIN, CHAPMAN, WILKINSON and WILKINS, Circuit Judges, sitting in banc.

WILKINSON, Circuit Judge:

This case presents a Sixth Amendment challenge to the application of the criminal forfeiture provisions of the Continuing Criminal Enterprise (CCE) statute, 21 U.S.C. Sec. 853, to defense attorneys' fees. Appellee Caplin & Drysdale contends that forfeiture of attorneys' fees violates the Sixth Amendment right to the assistance of counsel. We reject this challenge because there is no established Sixth Amendment right to pay an attorney with the illicit proceeds of drug transactions. The difficult policy choices posed by application of the forfeiture statutes to attorneys' fees provide no basis for the creation of such a right. Those choices are properly the concern of Congress, not the federal courts, and the plain language of the criminal forfeiture provisions indicates that Congress did not intend for attorneys' fees to be exempted.

I.

A.

The Comprehensive Forfeiture Act of 1984 (CFA), Pub. L. No. 98-473, 98 Stat. 2040 (1984), revised the forfeiture provisions of both the RICO and CCE statutes. This case concerns only a CCE prosecution, but the RICO provisions are basically identical. The CFA generally expanded the type of property that is subject to forfeiture, the crimes that can give rise to forfeiture, and prosecutors' ability to restrain property transfers by defendants both before and after indictment. Restraining orders under the CFA allow courts to enjoin defendants or their associates from moving money out of the courts' reach prior to a conviction so as to escape forfeiture. See 21 U.S.C. Sec. 853(e).

Critical to this case is the CFA's "relation back" provisions, under which forfeiture occurs at the time an offense is committed:

(c) All right, title, and interest in property described in subsection (a) of this section vests in the United States upon the commission of the act giving rise to forfeiture under this section. Any such property that is subsequently transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and thereafter shall be ordered forfeited to the United States ...

21 U.S.C. Sec. 853(c). The government thus takes the forfeited property that was in the hands of the defendant at the time of the offense, not at the time of conviction. Application of this provision to fees paid to an attorney prior to a conviction results in forfeiture of the fees, because the government's interest in the property predates the transfer to the lawyer.

The CFA allows a third party such as the attorney to assert an interest in the forfeited property in a post-forfeiture hearing. The third party can prevail only if:

(B) The petitioner, is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of the purchase reasonably without cause to believe that the property was subject to forfeiture under this section.

21 U.S.C. Sec. 853(n). Thus, if attorneys or other third parties can meet the requirements of Sec. 853(n), they may retain property that would otherwise belong to the government under Sec. 853(c).

B.

This controversy over attorneys' fees arose during the tax and CCE prosecution of Christopher Reckmeyer. Reckmeyer controlled an illicit drug operation that employed over twenty people, distributed tons of marijuana and hashish, and created business entities that laundered drug profits through various types of transactions. Reckmeyer's plea agreement stated that his organization was responsible for the distribution of more than 169 tons of marijuana and ten tons of hashish over the course of fifty ventures. Reckmeyer realized millions of dollars from drug transactions, which were his only significant source of income. See United States v. Reckmeyer, 786 F.2d 1216, 1217, 1222 (4th Cir.1986).

During the summer of 1983, eighteen months prior to his indictment in the Eastern District of Virginia, Reckmeyer retained the law firm of Caplin & Drysdale. On January 14, 1985, the government obtained an ex parte restraining order under the CCE statute preventing any transfer of Reckmeyer's assets. One day later the government filed an indictment that sought forfeiture of virtually all of Reckmeyer's assets. Reckmeyer made regular fee payments to Caplin & Drysdale. One of these payments consisted of approximately $25,000 in cash, delivered to the firm on January 25, 1985, the day Reckmeyer surrendered to authorities. The firm notified the court of the receipt of the funds, which were then deposited in an escrow account. After the indictment, Caplin & Drysdale continued to represent Reckmeyer at his request.

Reckmeyer pled guilty to three counts of the indictment on March 14, 1985. On the following day, the district court denied Caplin & Drysdale's motion to exempt its fees from a post-indictment restraining order that had been issued in January. The court ruled that because Reckmeyer had pled guilty, Caplin & Drysdale could claim its fees only through the post-forfeiture hearing provided to third parties by Sec. 853(n). Upon Reckmeyer's conviction on May 17, 1985, the court entered a forfeiture order encompassing virtually all of Reckmeyer's assets, including the $25,000 held in escrow. One month later, Caplin & Drysdale filed a third-party claim for $170,000 in unpaid legal fees. Caplin & Drysdale asserted that CCE forfeiture does not encompass fees paid for legal defense services actually rendered, and that if the statute does encompass fees, it violates the Fifth and Sixth Amendments.

The court granted Caplin & Drysdale's third-party claim, holding that Congress did not intend for the forfeiture provisions to reach fees paid for actual services. United States v. Reckmeyer, 631 F.Supp. 1191 (E.D.Va.1986). The court further stated that an interpretation of the statute that allowed fee forfeiture would violate the defendant's right to counsel of choice and to effective assistance of counsel. Id. at 1196. The government appealed, and the case was consolidated for argument with two others. A panel of this court affirmed the district court, holding that the CFA does apply to attorneys' fees, but that the statute is to that extent unconstitutional because it violates the Sixth Amendment right to counsel of choice. United States v. Harvey, 814 F.2d 905 (4th Cir.1987). This court granted rehearing en banc in the Caplin & Drysdale case alone.

II.

The threshold question in this case is whether the CFA permits the forfeiture of attorneys' fees. As to that issue, we endorse the panel opinion in Harvey and briefly summarize its conclusions. The panel opinion noted that the CFA's language is unmistakably clear, and so plainly reaches property used or intended to be used for attorneys' fees that the inquiry should end without resort to legislative history. In any event, the legislative history provides no basis for concluding that attorneys' fees are not subject to forfeiture under the terms of the CFA. Harvey, 814 F.2d at 913-18.

The language of the forfeiture statute makes no mention of attorneys' fees, either in its definition of property that is subject to forfeiture in sections 853(a) and (b), or in its provision for third-party claims of exemption in Sec. 853(n). The clear terms of the statute subject a defendant's assets to forfeiture without regard to whether he intends to use them to pay an attorney. Similarly, the statute exempts only those third parties who have prior claims or are bona fide purchasers, without regard to whether they are attorneys. Where, as here, a statute's language is unambiguous, the court's task of statutory construction is at an end unless enforcement of the literal language would contravene a clearly expressed legislative intention. Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 298, 78 L.Ed.2d 17 (1983).

The legislative history of the CFA reveals no congressional intent that would require exemption of attorneys' fees from the reach of the statute. Some courts have seized upon passages in the legislative history expressing the need to prevent defendants from avoiding forfeiture through sham transactions. From these passages, the courts have concluded that forfeiture is to apply to attorneys' fees only if the funds were given to the attorney not in return for services, but in order to fraudulently harbor them from forfeiture. See United States v. Estevez, 645 F.Supp. 869 (E.D.Wis.1986); United States v. Ianniello, 644 F.Supp. 452 (S.D.N.Y.1985); United States v. Badalamenti, 614 F.Supp. 194 (S.D.N.Y.1985); United States v. Rogers, 602 F.Supp. 1332 (D.Colo.1985)...