U.S. v. Ginsburg

• Decision Date: 13 September 1985
• Docket Number: No. 84-1765,84-1765
• Citation: 773 F.2d 798
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard A. GINSBURG, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 798

773 F.2d 798

54 USLW 2190

UNITED STATES of America, Plaintiff-Appellee, v. Richard A. GINSBURG, Defendant-Appellant.

No. 84-1765.

United States Court of Appeals,

Seventh Circuit.

Argued June 17, 1985.

Decided Sept. 13, 1985.

Scott Turow, Deputy Chief U.S. Atty., Dan K. Webb, U.S. Atty., Chicago, Ill., for defendant-appellant.

Thomas A. Corfman, Chicago, Ill., for plaintiff-appellee.

Before CUMMINGS, Chief Judge, BAUER, WOOD, CUDAHY, ESCHBACH, POSNER, COFFEY, FLAUM, EASTERBROOK and RIPPLE, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

FLAUM, Circuit Judge.

This appeal presents the issue of whether the government must prove beyond a reasonable doubt the existence, at the time of a defendant's conviction, of any interest that the defendant has acquired in violation of section 1962 of the Racketeer Influenced and Corrupt Organizations chapter of the Organized Crime Control Act of 1970, 18 U.S.C. Secs. 1961 et seq. (1982) ("RICO"), before the government can obtain a forfeiture of that interest under section 1963(a)(1) of RICO. A panel of this court, in reliance on prior decisions of this circuit, held in an unpublished order that the government did bear such a burden, United States v. Ginsburg, 753 F.2d 1079 (7th Cir.1985), and a majority of the court subsequently voted to rehear the case en banc. We now hold that section 1963(a)(1) imposes no such burden of proof on the government, and accordingly affirm the district court's judgment ordering defendant Richard A. Ginsburg to forfeit the sum of $225,000 to the United States.

I.

Because the facts of this case are not in dispute on appeal, we will summarize them briefly. Defendant Ginsburg and his codefendant Theodore J. Schmidt were partners in a law firm that represented clients before the Cook County Board of (Tax) Appeals between January 1976 and September 1982. It was stipulated that the firm received $450,000 in legal fees during that period from cases that were processed at the Board of (Tax) Appeals. On September 9, 1982, Ginsburg and Schmidt were charged in an indictment with nineteen counts of mail fraud (18 U.S.C. Sec. 1341) and one count of violating section 1962(c) of RICO. The indictment alleged that Ginsburg and Schmidt had bribed employees at the Board of (Tax) Appeals to obtain favorable treatment of their cases.

Following a jury trial, Ginsburg was found guilty on all twenty counts. The jury also returned a special verdict on count 20, the RICO count, finding that Ginsburg had an interest in the legal fees received by the firm of Schmidt & Ginsburg between January 1976 and September 1982 for cases processed at the Board of (Tax) Appeals. Ginsburg was sentenced to five years probation on each of counts 1 through 20, to run concurrently, with the condition that he make restitution in the sum of $150,000 and provide 1,000 hours of community service. He was further ordered to forfeit his one-half interest in the firm's legal fees, or $225,000, to the government under RICO's forfeiture provision, 18 U.S.C. Sec. 1963(a)(1) (1982). The amount of restitution was to be credited against the forfeiture.

The government presented no evidence at trial that Ginsburg possessed or controlled, at the time of his conviction, the money that he had received in legal fees between 1976 and 1982. On appeal, Ginsburg does not contest his conviction or assert any trial errors, but rather argues that the trial court's forfeiture order must be vacated because the government failed to prove beyond a reasonable doubt that the legal fees he had received between 1976 and 1982 were still in existence at the time of his conviction in March 1984.

II.

At the time of Ginsburg's conviction, section 1963(a) provided that

[w]hoever violates any provision of section 1962 of this chapter shall be fined not more than $25,000 or imprisoned not more than twenty years, or both, and shall forfeit to the United States (1) any interest he has acquired or maintained in 18 U.S.C. Sec. 1963(a) (1982). ¹ In determining the scope of this section, we must "look first to its language. If the statutory language is unambiguous, in the absence of 'a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive.' " Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 299, 78 L.Ed.2d 17 (1983) (quoting United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981)). We believe that the language of section 1963(a)(1) is clear--whoever violates section 1962 of RICO "shall forfeit to the United States ... any interest he has acquired ... in violation of section 1962." Nothing in the language of section 1963(a)(1) provides or even suggests the limitation that the interest acquired in violation of section 1962 must be in existence at the time of conviction before it can be forfeited.

violation of section 1962, and (2) any interest in, security of, claim against, or property or contractual right of any kind affording a source of influence over, any enterprise which he has established, operated, controlled, conducted, or participated in the conduct of, in violation of section 1962.

The defendant argues that despite its plain language, section 1963(a)(1) must be read as imposing on the government the burden of proving the existence, at the time of conviction, of a defendant's profits and proceeds from racketeering activity. This argument is primarily based on the fact that RICO's criminal forfeiture provision is an in personam proceeding, rather than a civil in rem proceeding against the property itself, and thus that the government's interest in the property does not attach until the time of the defendant's conviction of the crime for which the forfeiture is sought. Although we agree with the defendant's premises, we cannot agree with his conclusion that because the government's interest does not attach until the time of conviction, it is limited to whatever proceeds are left at the time of conviction.

Congress's use of the criminal forfeiture sanction in RICO revived a punishment that had not been used in the United States since 1790. See United States v. McManigal, 708 F.2d 276, 288 (7th Cir.), vacated on other grounds, --- U.S. ----, 104 S.Ct. 419, 78 L.Ed.2d 355 (1983); Reed, Criminal Forfeiture Under the Comprehensive Forfeiture Act of 1984: Raising the Stakes, 22 Am.Crim.L.Rev. 747, 747-48 (1985). As the Fifth Circuit stated in United States v. L'Hoste, 609 F.2d 796 (5th Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 104, 66 L.Ed.2d 39 (1980):

The forfeiture penalty incorporated in section 1963 differs from other presently existing forfeiture provisions in federal statutes. Under other statutes, the forfeiture proceeding is in rem against the property, since the property being forfeited is itself considered the offender, and the forfeiture is no part of the punishment for the criminal offense. By enacting section 1963, however, Congress revived the concept of forfeiture as a criminal penalty against the individual, since the proceeding is in personam against the defendant and the forfeiture is part of the punishment.

609 F.2d at 813 n. 15. See also United States v. Conner, 752 F.2d 566, 576 (11th Cir.1985), petition for cert. filed, 53 U.S.L.W. 3870 (U.S. May 24, 1985) (No. 84-1853); United States v. Kravitz, 738 F.2d Although the government's interest in property subject to criminal forfeiture does not attach until the defendant is convicted of the crime for which the forfeiture is imposed, see McManigal, 708 F.2d at 289 n. 6 (government's right to the property attaches on conviction), it does not follow, as the defendant argues, that the extent of the government's interest is limited to whatever the defendant still has in his possession at the time of conviction or that the government bears the burden of proving that the dollars obtained in violation of section 1962, often many years earlier, are the same dollars in the defendant's bank account at the time of conviction. The characteristics of criminal forfeiture argue against that conclusion. Since RICO forfeiture is a sanction against the individual defendant rather than a judgment against the property itself, "it follows the defendant as a part of the penalty and thus it does not require that the government trace it, even though the forfeiture is not due until after conviction." United States v. Conner, 752 F.2d at 576. It therefore does not matter whether the government recovers the identical dollars that the defendant received in violation of section 1962, as long as the amount that the defendant acquired in violation of the statute is known. Id.

102, 106 (3d Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1752, 84 L.Ed.2d 816 (1985); United States v. Cauble, 706 F.2d 1322, 1347, 1349 (5th Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 996, 79 L.Ed.2d 229 (1984); United States v. Huber, 603 F.2d 387, 396 (2d Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980). RICO forfeiture is a punishment imposed on a guilty defendant. It deprives that defendant of all of the profits or proceeds that he has acquired through racketeering activity, regardless of whether those assets are themselves "tainted" by use in connection with the illicit activity. See Reed, supra, at 748 (the scope of an in personam forfeiture is defined by the scope of the defendant's criminal conduct).

In short, while the government's interest in the profits or proceeds of racketeering activity does not attach until conviction, its interest vests at the time of the act that constitutes the section 1962 violation and cannot subsequently be defeated, as far as section 1963(a)(1) is concerned, if the defendant dissipates or transfers away the proceeds subject to forfeiture. ² The government's right to forfeit the profits or proceeds of racketeering activity under section 1963(a)(1) is therefore not limited to whatever is left over or unspent at...