Herzfeld v. U.S. Dist. Court for Dist. of Colorado
| Decision Date | 31 January 1983 |
| Docket Number | 82-2044,Nos. 82-1948,82-2045 and 82-2046,82-1994,s. 82-1948 |
| Citation | 699 F.2d 503 |
| Parties | Robert C. HERZFELD, Petitioner, v. The UNITED STATES DISTRICT COURT For the DISTRICT OF COLORADO and the Honorable Fred M. Winner, Respondents. UNITED STATES of America, Plaintiff, v. Trenton H. PARKER, International Mining Exchange, Inc., Defendants, Elizabeth Eken, as representative of the class of investors defrauded by Trenton H. Parker and International Mining Exchange, Inc., Appellant, William C. Lam, Receiver-Appellee. Robert C. HERZFELD, Plaintiff-Appellant, v. Trenton H. PARKER, Adrian Doyle, James T. Wilson, Stephen Spangler, Robert E. Norwood and International Mining Exchange, a Colorado corporation, Defendants- Appellees. Robert F. BROWN, Robert A. Brandt and RFB Petroleum, Inc., a Texas corporation, Plaintiffs-Appellants, v. Trenton H. PARKER, the International Mining Exchange, Inc., a Colorado corporation, R. Steven Spangler, James T. Wilson, Adrian Doyle and Robert Norwood, Defendants-Appellees. Elizabeth EKEN and William Johnson, Plaintiffs-Appellants, v. INTERNATIONAL MINING EXCHANGE, INC., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Patrick C. English of Dines, English & O'Kane, Clifton, N.J. (Walter L. Gerash of Gerash & Robinson, P.C., Denver, Colo., with him on brief), for plaintiff-appellant Elizabeth Eken.
Richard B. Podoll of Podoll & Podoll, P.C., Denver, Colo., for plaintiff-appellant Robert C. Herzfeld.
William A. Wilson of William Andrew Wilson, P.C., Denver, Colo., for plaintiffs-appellants Robert F. Brown and RFB Petroleum, Inc.
Richard N. Stuckey of Keene, Munsinger & Stuckey, Denver, Colo., for receiver-appellee William C. Lam.
Robert T. McAllister, Asst. U.S. Atty., Denver, Colo. (Robert N. Miller, U.S. Atty. and Gerald J. Rafferty, Asst. U.S. Atty., Denver, Colo., with him on brief), for plaintiff United States of America.
Before SETH, Chief Judge, and BARRETT and DOYLE, Circuit Judges.
In this case we consider consolidated appeals all of which arise from a somewhat involved set of facts. We set out only the facts necessary to explain our disposition of the matter.
Trenton H. Parker was indicted in Colorado for mail fraud in connection with an investment plan. During his trial he pled guilty in the United States District Court for Colorado, 543 F.Supp. 1019, under a plea agreement pursuant to which he transferred to that court in Colorado approximately six million dollars which had been on deposit in a bank in the Bahamas. This money was part of the proceeds of the "Gold Tax Shelter Investment Program" which was the particular scheme which gave rise to the criminal charges. Pursuant to the plea agreement and the sentencing, the United States District Judge in Colorado ordered that the money be used for restitution to those investors defrauded by the Gold Tax scheme. The judge further ordered that the restitution be effected through a receivership and appointed a receiver. This appointment of a receiver during the course of the criminal proceedings and with no pending civil action is contested in each of the instant appeals.
Prior to the criminal proceedings several private investors, among them appellant Herzfeld, filed suits in the United States District Court for Colorado to recover monies lost in some of Mr. Parker's investment plans. After a lengthy discovery process, summary judgment for these plaintiffs was therein granted for about four million dollars. By far the greatest part of that figure represented attorney's fees and punitive damages. Shortly thereafter (December 23, 1981) a class action was brought in New Jersey on behalf of investors defrauded in the "Gold Tax Shelter Investment Program." The United States District Judge certified the class on January 29, 1982 and issued a restraining order against Barclay's Bank in the Bahamas and others. There were deposits of Mr. Parker in the bank which were proceeds of the Gold Tax scheme.
The Grand Cayman bank had entered no appearance in the class action pending in New Jersey. The government argues that any conformance by the bank to the restraining order would have been a purely voluntary matter. Thus it points to an affidavit by an Assistant United States Attorney which recites that the bank manager and its counsel advised him, apparently after the fact, that the bank would not honor a restraining order and would instead have transferred the funds on the request of Mr. Parker. Also, the only action taken by the bank was taken after the depositor, Mr. Parker, requested that the funds be transferred to Colorado pursuant to the plea agreement and the funds were so immediately transferred.
We do not decide whether the Grand Cayman bank was or was not bound by the orders of the New Jersey court. The court modified its order about the same time to permit the transfer of funds and the transfer was made in any event. Mr. Parker entered his plea on February 9, 1982 and he directed the bank to make the transfer. As mentioned, the funds were so transferred by the Grand Cayman bank to Colorado, and then into the registry of the court and to the receiver. The receiver was later directed by the instructions of the court given at the sentencing of Trenton Parker. The receiver invested the funds pending their distribution and set about to identify the defrauded investors.
Before any disbursement, the claims here considered were asserted against the funds. The plaintiffs in the Colorado civil actions attempted garnishment of the money in the receivership as did the class action plaintiffs. These parties argued that the receivership was void and that the funds were subject to garnishment. The class certified in New Jersey also moved to have the money transferred into a receivership there. In support of this motion the class also argued that the Colorado receivership was void.
The claims by the parties in the civil suits came before a judge other than the one before whom the criminal action had been heard and he ruled that the civil plaintiffs could not prevail unless the receivership established in the criminal case was found to be void. He refused to invalidate the receivership, he quashed the writs of garnishment, and denied the motion to transfer the funds to New Jersey. The judge recognized that the validity of the appointment of a receiver in a criminal case was the controlling question of law in the disposition of the claims of the civil plaintiffs, and was a matter about which there could be substantial difference of opinion. He formally made these findings for review under 28 U.S.C. Sec. 1292.
In addition to this, the Colorado plaintiffs have petitioned this court for a writ of prohibition directed against the receivership. Finally, there was an appeal pending from the denial of a motion filed by the New Jersey class plaintiffs in the Colorado criminal case requesting the transfer of the funds to New Jersey. These cases are consolidated to consider the question whether the receivership established in the criminal case is valid.
The district court's power to provide for restitution is created by the statutes relating to probation and suspension of sentences. Thus 18 U.S.C. Sec. 3651 provides in part that:
"While on probation and among the conditions thereof, the defendant--
....
"May be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which conviction was had; and ...."
The statute does not delineate what, if any, special powers are granted to the sentencing court to create means by which restitution might be accomplished. This restitution is part of the criminal and sentencing procedure under the statute.
Rule 57(b) of the Federal Rules of Criminal Procedure gives courts latitude in fashioning special procedures. This section reads:
"If no procedure is specifically prescribed by rule, the court may proceed in any lawful manner not inconsistent with these rules or with any applicable statute."
There is no convincing claim that any rule or statute makes the order in question "unlawful" nor that it is necessarily inconsistent with statutory law. Instead the parties in the civil actions urge that there is an absence of express authority and thus of jurisdiction to create the receivership.
The appellants urge that the legislative history as well as some judicial interpretation of Rule 57(b) suggests that it was directed to alleviate possible conflicts between state and federal procedures, and that it cannot be used to justify such an unusual practice as is here in question. 8B Moore's Federal Practice p 57.03 at...
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