U.S. v. Lewis

• Decision Date: 22 March 1985
• Docket Number: 83-1721,Nos. 83-1705,83-1899 and 83-2145,83-1736,s. 83-1705
• Citation: 759 F.2d 1316
• Parties: 18 Fed. R. Evid. Serv. 13 UNITED STATES of America, Appellee, v. Paula LEWIS, Appellant. UNITED STATES of America, Appellee, v. Gary DARNALL, Appellant. UNITED STATES of America, Appellee, v. Terry CRAFTON, Appellant. UNITED STATES of America, Appellee, v. Ross Alan MILBURN, Appellant. UNITED STATES of America, Appellee, v. Marion MILBURN, Appellant. UNITED STATES of America, Appellee, v. Ross E. MILBURN, Appellant. UNITED STATES of America, Appellee, v. Ronald THROOP, Appellant. UNITED STATES of America, Appellee, v. Paula THROOP, Appellant. to 83-2148.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1316

759 F.2d 1316

18 Fed. R. Evid. Serv. 13

UNITED STATES of America, Appellee, v. Paula LEWIS, Appellant.

UNITED STATES of America, Appellee, v. Gary DARNALL, Appellant.

UNITED STATES of America, Appellee, v. Terry CRAFTON, Appellant.

UNITED STATES of America, Appellee, v. Ross Alan MILBURN, Appellant.

UNITED STATES of America, Appellee, v. Marion MILBURN, Appellant.

UNITED STATES of America, Appellee, v. Ross E. MILBURN, Appellant.

UNITED STATES of America, Appellee, v. Ronald THROOP, Appellant.

UNITED STATES of America, Appellee, v. Paula THROOP, Appellant.

Nos. 83-1705, 83-1721, 83-1736, 83-1899 and 83-2145 to 83-2148.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 10, 1984.

Decided March 22, 1985.

Rehearing in No. 83-1705 Denied April 30, 1985.

Rehearing and Rehearing En Banc Denied in Nos. 83-1899,

83-2145-83-2148 May 15, 1985.

Leonard J. Frankel, Alan G. Kimbrell, St. Louis, Mo., Bobby McDaniel, Jonesboro, Ark., Barry A. Short, St. Louis, Mo., for appellant.

James E. Crowe, Jr., Mitchell F. Stevens, Asst. U.S. Attys., St. Louis, Mo., for appellee.

Before HEANEY, Circuit Judge, HENLEY, Senior Circuit Judge, and BOWMAN, Circuit Judge.

HEANEY, Circuit Judge.

Ross Alan Milburn was convicted for maintaining a Continuing Criminal Enterprise (CCE) in violation of 21 U.S.C. Sec. 848 (1982) and for conspiracy to commit tax fraud in violation of 18 U.S.C. Sec. 371; he was sentenced to life imprisonment without parole on the former charge and a concurrent five-year sentence and a $10,000 fine on the latter. Three of Milburn's associates, Gary Darnall, Terry Crafton and Paula Lewis, were convicted on cocaine distribution and conspiracy charges in violation of 21 U.S.C. Sec. 846, and they were sentenced respectively to two consecutive ten-year terms of imprisonment, a six-year term of imprisonment, and a five-year term of imprisonment with a $5,000 fine. Finally, Ross E. and Marion Milburn (Ross Alan Milburn's parents) and Ronald and Paula Throop (Ross Alan Milburn's sister and brother-in-law) were convicted of conspiring to commit tax fraud in violation of 18 U.S.C. Sec. 371. Marion Milburn was sentenced to a year in prison and a $2,000 fine; Ross E. Milburn was sentenced to three years in prison and a $10,000 fine; Ronald Throop was sentenced to a year in prison; and Paula Throop was sentenced to four years in prison and a $5,000 fine. On appeal, each of these defendants raises multiple arguments which we consider in turn.

I. ROSS ALAN MILBURN ¹

The principal issues Milburn raises on appeal are: (1) whether the issuance of a temporary restraining order (TRO) freezing his assets violated his sixth amendment right to counsel; (2) whether certain records, testimony, and summary exhibits were improperly admitted into evidence, (3) whether the district court improperly accepted the government's use of a "net worth" theory to support the forfeiture count in the indictment; (4) whether the district court properly interpreted the "five or more" element of 21 U.S.C. Sec. 848; and (5) whether Milburn's prison sentence was cruel and unusual.

A. Milburn's Sixth Amendment/Forfeiture Claim.

About seven months before Milburn's trial, the government sought an ex parte restraining order under 21 U.S.C. Sec. 848 to prevent Milburn, his parents, and the Throops from selling or moving interests in twenty-one pieces of property which it alleged were purchased with profits of crime. The district court granted a ninety-day TRO which, after separate hearings, was extended until an adversary hearing could be held. At the adversary hearing, the magistrate found that the government had carried its burden as to all but three of the enumerated items of property. As a result, the district court extended the TRO until the trial's end. For reversal, Milburn argues that the district court's failure to follow proper procedure in restraining his assets deprived him improperly of his sixth amendment right to retain counsel of his choice.

We turn first to the question of whether the district court complied with proper procedure for restraining Milburn's use of his property. The relative rarity of forfeiture provisions in criminal statutes throughout American history suggests that criminal forfeitures are extreme sanctions. This compels us to scrutinize closely the constitutional implications of ex parte criminal forfeitures or restraints. This point is underscored by the in personam nature of this type of forfeiture; the guilt of the defendant is at issue, and the loss of his property operates as an additional criminal penalty. See United States v. Long, 654 F.2d 911, 914 (3d Cir.1981). Under the circumstances, the process that is due becomes that much greater.

In pertinent part, 21 U.S.C. Sec. 848(d) (1982) provides:

The district courts of the United States * * * shall have jurisdiction to enter such restraining orders or prohibitions, or to take such other actions, including the acceptance of satisfactory performance bonds, in connection with any property or other interest subject to forfeiture under this section, as they shall deem proper.

The highly discretionary nature of the statute has led the courts to limit their own discretion under the statute, discretion which otherwise might be susceptible to abuse. After the temporary restraining order had been issued in this case, but before the adversary hearing was held, the district court properly invoked Fed.R.Civ.P. 65, which sets forth the standards for ex parte restraining orders. See United States v. Spilotro, 680 F.2d 612, 617 (9th Cir.1982). At the adversary hearing, the district court also approved use of the federal rules of evidence, including the proscription of hearsay evidence.

The standard for an in personam forfeiture proceeding under the CCE or RICO statutes has been set out by three other courts of appeals. The Third Circuit standard is the most often-cited enumeration of the criteria governing restraining orders, and is a standard with which we agree.

Before a court can issue [preconviction restraining orders that prohibit transfer of a defendant's property], however, the government must demonstrate that it is likely to convince a jury, beyond a reasonable doubt, of two things: one, that the defendant is guilty of violating the Continuing Criminal Enterprise statute and two, that the profits or properties at issue are subject to forfeiture under the provisions of section 848(a)(2). * * * In addition, these determinations must be made on the basis of a full hearing; the government cannot rely on indictments alone. [Citations omitted.]

Long, 654 F.2d at 915. See also United States v. Crozier, 674 F.2d 1293, 1297-98 (9th Cir.1982); United States v. Veon, 538 F.Supp. 237, 245 (E.D.Cal.1982).

Given these standards, we do not believe that the district court adhered to the principles of due process. In the government's Motion for Restraining Order the United States Attorney declared that "the Court's power to so act [in entering restraining orders under Sec. 848(d) ] is plenary and may be entered sua sponte, or ex parte without the necessity of a hearing." This is an incorrect statement of the law. As the district court subsequently noted, and as we have noted above, Federal Rule of Civil Procedure 65 is incorporated by inference in the "restraining orders or prohibitions, or * * * other actions" which the district court may authorize under section 848(d). Any other policy would allow the essential decision on the restraining order affecting defendants' assets and ability to pay retained counsel to be made ex parte without retained counsel and on the basis of affidavits or indictments. Although the preliminary injunction hearing and the trial which follow might offer some protection of defendants' rights, they are too little and too late to guarantee the protections of retained counsel.

Other courts have taken this position in cases less egregious than this one, cases in which the sixth amendment is not implicated. In Crozier, the Ninth Circuit used an imperative in interpreting the procedural requirements of section 848(d):

In the absence of specific language to the contrary, the district court must apply the standards of Rule 65 of the Federal Rules of Civil Procedure, which requires an immediate hearing whenever a temporary restraining order has been granted ex parte.

674 F.2d at 1297. See also Spilotro, 680 F.2d at 617 (citing the quoted passage with approval).

The district court's belated recognition in this case that section 848(d) implicitly relies on Rule 65 is insufficient to cure the effects of its earlier noncompliance with the procedural safeguards of the rule. Rule 65(b) provides a checklist of the procedural requirements which the district court disregarded. First, it must "clearly appear[ ] from specific facts" that "immediate and irreparable injury, loss, or damage will result to the applicant" before an adversary hearing can be convened. [Emphasis added.] The district court's order of August 23, 1982 (which omits reference to Rule 65) makes no reference to the strength or specificity of the underlying facts and suggests only that defendants "might place certain property beyond the jurisdiction of this Court * * *." (Emphasis added.) ² Second, before a temporary restraining order is granted under Rule 65, the applicant's attorney must certify to the court, in writing, the efforts made to notify the opposing party and the reasons supporting his claim that notice is unnecessary. Neither the district court's order nor the government's affidavit refers to the ex parte nature of the temporary restraining order nor do they comply with this notice requirement. In addition, the district court's order does not "define the injury and state why it is irreparable and why the order was granted without notice." The order also exceeds the ten-day expiration date by eighty days without good cause shown, and the record does not reflect...