U.S. v. Nichols

• Decision Date: 10 March 1988
• Docket Number: 87-1743,Nos. 87-1459,s. 87-1459
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Scott L. NICHOLS; Ronald W. Bouck, also known as Little Ronnie, also known as LR; Gary G. Barnett, also known as Bam Bam; Cory Day, also known as Daylight, also known as DL; Gary A. Fisher; Kevin L. Hoffman; David Palomino, Defendants-Appellees, and James Jay Bobo; Van T. Duke; Mark H. Feltman; Cindy S. Fenton; Donald A. Fenton; Debra Ann Filipe; Paul D. Hunt, also known as C St.; Ronald Iriarte, also known as Big Ronnie, also known as Richard Lopez; Rudolfo Lema, also known as RD; Nannette Mackelprang; Perfecto Russell Montoya; Augusto A. Penaloza; Jill Shayne; Randall C. Stephens, also known as Chuck, also known as CH; Claude W. Taylor, also known as Arnold, also known as AR; Steven R. Taylor, also known as Ranch; John Mark Valgardson; Mark L. West; John Doe, also known as Nicholas Crowder; Geovani Cordano; Kevin A. Reynolds, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1485

841 F.2d 1485

56 USLW 2554

UNITED STATES of America, Plaintiff-Appellant, v. Scott L. NICHOLS; Ronald W. Bouck, also known as Little

Ronnie, also known as LR; Gary G. Barnett, also known as

Bam Bam; Cory Day, also known as Daylight, also known as

DL; Gary A. Fisher; Kevin L. Hoffman; David Palomino,

Defendants-Appellees,

and

James Jay Bobo; Van T. Duke; Mark H. Feltman; Cindy S.

Fenton; Donald A. Fenton; Debra Ann Filipe; Paul D. Hunt,

also known as C St.; Ronald Iriarte, also known as Big

Ronnie, also known as Richard Lopez; Rudolfo Lema, also

known as RD; Nannette Mackelprang; Perfecto Russell

Montoya; Augusto A. Penaloza; Jill Shayne; Randall C.

Stephens, also known as Chuck, also known as CH; Claude W.

Taylor, also known as Arnold, also known as AR; Steven R.

Taylor, also known as Ranch; John Mark Valgardson; Mark L.

West; John Doe, also known as Nicholas Crowder; Geovani

Cordano; Kevin A. Reynolds, Defendants.

Nos. 87-1459, 87-1743.

United States Court of Appeals, Tenth Circuit.

March 10, 1988.

Rehearing Denied April 22, 1988.

William J. Landers, Deputy Associate Atty. Gen. (William F. Weld, Asst. Atty. Gen., and Brent D. Ward, U.S. Atty., with him on the briefs), for plaintiff-appellant.

G. Fred Metos, of Yengich, Rich, Xaiz & Metos, Salt Lake City, Utah, for defendant-appellee Scott L. Nichols.

Stephen J. Eisenberg, of Eisenberg Law Offices, S.C., Madison, Wis., for defendant-appellee David Palomino.

Kenneth R. Brown, Salt Lake City, Utah, for defendant-appellee Cory Day.

Kevin J. Kurumada, Salt Lake City, Utah, for defendant-appellee Gary A. Fisher.

Colin P. King, of Giauque, Williams, Wilcox & Bendinger, Salt Lake City, Utah, for defendant-appellee Kevin L. Hoffman.

Before LOGAN, McWILLIAMS, and TACHA, Circuit Judges.

TACHA, Circuit Judge.

Congress provided in the Comprehensive Crime Control Act of 1984 that anyone convicted of a federal drug felony must forfeit any fruits of that crime and any property used in the commission of the crime to the federal government. The United States appeals from a decision of the district court holding that, while Congress did not intend to exempt attorneys' fees from forfeiture, the act violates the sixth amendment right to choice of counsel to the extent that the act requires the forfeiture of assets that would otherwise be paid to an attorney representing the defendant in the charged offense. We conclude that the act is constitutional and reverse.

I. CRIMINAL FORFEITURE LAW

In 1984 Congress amended federal criminal forfeiture law. These amendments are best understood within the historical context of forfeiture. See generally Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680-86, 94 S.Ct. 2080, 2090-94, 40 L.Ed.2d 452 (1974); United States v. Sandini, 816 F.2d 869, 872-73 (3d Cir.1987). There are two types of forfeiture: criminal and civil. A civil forfeiture proceeding is an in rem action against the property that the government seeks to obtain. The guilt or innocence of the property owner is irrelevant in a civil action because the theory is that the property itself has committed the wrong. Calero-Toledo, 416 U.S. at 680-81, 94 S.Ct. at 2090-91. Further, because the property is considered tainted upon the commission of the wrongful act, the interest of the government vests at the time of the act.

Conversely, criminal forfeiture is in personam: it operates against a convicted criminal defendant. The historical English use of criminal forfeiture provided that a defendant convicted of treason or a felony forfeited his entire estate to the crown. As Blackstone wrote, this practice rested on the belief that "all property is derived from society," so that if "a member of any national community violates the fundamental contract of his association, by transgressing the municipal law, he forfeits his right to such privileges as he claims by that contract." 1 W. Blackstone, Commentaries * 299.

Civil forfeiture has been widely used in the United States. Typically the government has been permitted to seek the forfeiture of contraband or harmful instrumentalities employed in an illegal activity. Civil forfeiture proceedings are available to obtain "virtually any type of property that might be used in the conduct of a criminal enterprise." Calero-Toledo, 416 U.S. at 683, 94 S.Ct. at 2091-92; see generally Hughes & O'Connell, In Personam (Criminal) Forfeiture and Federal Drug Felonies: An Expansion of a Harsh English Tradition into a Modern Dilemma, 11 Pepperdine L.Rev. 613, 618 (1984) (citing federal civil forfeiture statutes).

Criminal forfeiture, on the other hand, was employed infrequently in the United States before 1970. Much of the traditional hostility to criminal forfeiture in this country was the result of the use of the practice in England. The Founding Fathers rejected the English practice of forfeiture of estate for several reasons. See Note, Forfeiture of Attorneys' Fees: Should Defendants Be Allowed to Retain the "Rolls Royce of Attorneys" with the "Fruits of the Crime"?, 39 Stan.L.Rev. 663, 666 n. 20 (1987). In particular, concern about the effect of forfeiture on a defendant's family members and heirs resulted in the constitutional provision that "no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted." U.S. Const. art. III, Sec. 3. The First Congress prohibited forfeiture of estate as a criminal punishment. Act of April 30, 1790, ch. 9, Sec. 24, 1 Stat. 112, 117. Then, between 1790 and 1970, Congress provided for criminal forfeiture only once: to recover the life estates of Confederate soldiers. The Supreme Court upheld this statute as constitutional. Bigelow v. Forest, 76 U.S. (9 Wall.) 339, 19 L.Ed. 696 (1869); Miller v. United States, 78 U.S. (11 Wall.) 268, 20 L.Ed. 135 (1870).

The Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. Sec. 853, and the Organized Crime Control Act of 1970, 18 U.S.C. Sec. 1963, reintroduced criminal forfeiture into federal law. The 1970 statutes were enacted in response to widespread concern about the flow of illegal drugs and the activities of organized crime. In particular, Congress targeted professional criminals and the leaders of illicit drug empires and organized crime. The Drug Abuse Act imposed criminal sanctions on "continuing criminal enterprises" (CCE) active in the distribution of illegal drugs; the Organized Crime Control Act was aimed at "racketeer influenced and corrupt organizations" (RICO) prevalent in organized crime. Congress recognized that traditional criminal sanctions had failed to destroy active drug trafficking and other illegal activities. Therefore, both of the acts created new tools to combat the profitability of the sales of illegal drugs and the wide-ranging activities of organized crime. See United States v. Turkette, 452 U.S. 576, 588-89, 101 S.Ct. 2524, 2531-32, 69 L.Ed.2d 246 (1981) (interpreting RICO).

The criminal forfeiture provisions were the most promising of the devices enacted in the 1970 acts. "[I]n introducing forfeiture into federal criminal law, Congress sought to dissuade individuals from pursuing criminal gain and to eradicate the economic power bases making possible organized criminal and drug-related activities." United States v. McKeithen, 822 F.2d 310, 313 (2d Cir.1987) (footnote omitted). Thus, criminal forfeiture was designed both to penalize and to deter criminal activity. A defendant convicted of a CCE violation was required to forfeit any "profits" obtained through certain drug offenses, 21 U.S.C. Sec. 848(a)(2)(A), and a defendant convicted of a RICO violation was required to forfeit any "interest" acquired through the prohibited conduct, 18 U.S.C. Sec. 1963(a). See Russello v. United States, 464 U.S. 16, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) ("interest" includes the proceeds produced by an illegal enterprise).

Despite the new provisions, the drug problem continued unabated, and it was obvious that the much-heralded criminal forfeiture procedures had been ineffective in deterring either illegal drug trafficking or organized crime. Only ninety-eight CCE and RICO cases, involving about two million dollars in actually or potentially forfeitable assets, were brought between 1970 and March 1980. General Accounting Office, Asset Forfeiture--A Seldom Used Tool in Combatting Drug Trafficking ii (1981) [hereinafter GAO Report]. In comparison illegal drugs generated an estimated sixty billion dollars annually. Id. at i. As one observer later remarked, the amount of assets forfeited was but "a scandalous pittance when measured against the vast potential." President's Commission on Organized Crime, The Impact: Organized Crime Today 216 (1986) (statement of Commissioner Methvin).

Congress responded by investigating the use of the criminal forfeiture procedures. See Forfeiture in Drug Cases: Hearings Before the Subcomm. on Crime of the Comm. on the Judiciary House of Representatives, 97th Cong., 1st & 2d Sess. (1981-82) [hereinafter House Hearings]; Forfeiture of Narcotics Proceeds: Hearings Before the Subcomm. on Criminal Justice of the Comm. on the Judiciary United States Senate, 96th Cong., 2d Sess. (1980) [hereinafter Senate Hearings]. Many shortcomings in the existing statutes were identified. See generally S.Rep. No. 98-225, 98th Cong., 1st Sess. 194-97 [hereinafter S.Rep.], reprinted in 1984 U.S.Code Cong. & Admin.News 3182, 3377-80. The most significant shortcoming was the inability of the government to prevent the transfer of potentially forfeitable property to third parties and to obtain any such property once it had been transferred. A restraining order was not available until after an indictment had been issued listing property that could be forfeited, yet the government routinely notified subjects of pending grand jury deliberations to allow them an opportunity to appear before the grand jury. Once notified, a potential defendant was able to...