U.S. v. One-Sixth Share Lottery Ticket No. M246233

• Decision Date: 14 April 2003
• Docket Number: No. 02-1651.,No. 02-1557.,No. 02-1510.,02-1510.,02-1557.,02-1651.
• Citation: 326 F.3d 36
• Parties: UNITED STATES, Plaintiff, Appellee, v. ONE-SIXTH SHARE OF JAMES J. BULGER IN ALL PRESENT AND FUTURE PROCEEDS OF MASS MILLIONS LOTTERY TICKET NO. M246233, Registered in the Name of Michael Linskey, Defendant. Olga Davis; Marion Hussey; John P. Bulger, Claimants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 36

326 F.3d 36

UNITED STATES, Plaintiff, Appellee, v. ONE-SIXTH SHARE OF JAMES J. BULGER IN ALL PRESENT AND FUTURE PROCEEDS OF MASS MILLIONS LOTTERY TICKET NO. M246233, Registered in the Name of Michael Linskey, Defendant.

Olga Davis; Marion Hussey; John P. Bulger, Claimants, Appellants.

No. 02-1510.

No. 02-1557.

No. 02-1651.

United States Court of Appeals, First Circuit.

Heard January 7, 2003.

Decided April 14, 2003.

Robert S. Sinsheimer, with whom Sinsheimer & Associates was on the brief, for appellant Olga Davis.

Ann M. Donovan, with whom Law Office of Ann M. Donovan was on the brief, for appellant Marion Hussey.

George F. Gormley, with whom Christie M. Charles and George F. Gormley, P.C. were on brief, for appellant John P. Bulger.

Richard L. Hoffman, Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, was on the brief, for appellee.

Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

Three individuals moved to intervene in a long-closed civil forfeiture action. They sought to assert claims to a one-sixth share of a $14.3 million winning state lottery ticket, still in payout, which had belonged to James "Whitey" Bulger. Two of the claimants, Olga Davis and Marion Hussey, are mothers of young women whom Whitey Bulger allegedly murdered in the 1980s; the other is one of his brothers, John Bulger.

In 1995, Whitey Bulger was indicted for crimes related to his alleged leadership of the Winter Hill Gang in Boston. He went into hiding and is on the FBI's list of the "ten most wanted" fugitives. Later that year, the government brought an in rem civil forfeiture action against Bulger's share of the prize, based upon the theory that he had purchased the ticket as a money-laundering device. The district court entered a default judgment forfeiting the property in January 1996.

In 2001, the government, to its credit, filed a submission with the district court based on new information about the lottery ticket which cast doubt on its money-laundering theory. In its submission, the government argued that the forfeiture remained valid and should not be disturbed. Later that year, the three claimants, none of whom was previously involved in the forfeiture proceedings, moved to intervene and to reopen the case. Davis and Hussey also brought wrongful death actions in state court against Whitey Bulger in 2001.

The district court found that the motions were filed on the basis of newly-discovered evidence, and therefore were barred by the one-year limit for moving to vacate a judgment on this basis. See Fed.R.Civ.P. 60(b). We do not reach the Rule 60 issue. Instead, we hold that none of the claimants has either standing to intervene or a viable claim, and so affirm.

I.

The lottery ticket was a "season ticket," which enters the owner's selected numbers into every drawing for a year. In July 1991, the ticket won a $14.3 million jackpot, payable in twenty annual installments. The registered owner, Michael Linskey, claimed the prize. He also submitted to the Massachusetts State Lottery Commission a written agreement between himself and three partners whom he said had contributed to the $100 price of the ticket and co-owned it. According to the agreement, Michael Linskey owned half of the ticket. The other half was evenly divided between his brother, Patrick Linskey; Kevin Weeks; and Whitey Bulger. All three of these men were allegedly affiliated with the Winter Hill Gang, whose criminal activities are described in greater detail in United States v. Flemmi, 225 F.3d 78 (1st Cir.2000), and United States v. Salemme, 91 F.Supp.2d 141 (D.Mass.1999).

From 1991 through 1994, annual winnings and the attendant tax liability were duly apportioned to the four co-owners of the ticket. The Lottery Commission paid the winnings to Michael Linskey, who arranged for the South Boston Savings Bank to disburse the funds among the four owners. Under this arrangement, Whitey Bulger's share, $119,408 a year before taxes, was deposited in a joint account he held at that bank with John Bulger. The total amount of the payments due to Whitey Bulger from 1995 through the final payment in 2010 was nearly two million dollars before taxes.

In January 1995, Whitey Bulger was indicted for racketeering and other offenses related to his alleged organized crime activities. He disappeared and has not been apprehended. On July 17, 1995, the federal government brought a verified in rem complaint for civil forfeiture of Whitey Bulger's share of the ticket under 18 U.S.C. § 981(a)(1)(A) (1994) (amended 2000). A supporting affidavit provided information from two confidential informants who said that Whitey Bulger paid Michael Linskey $700,000 in cash for his share of the ticket after it won the jackpot, thus laundering illegal criminal proceeds by replacing the tainted funds with apparently legitimate payments from the Lottery Commission. A magistrate judge found that this complaint established probable cause and issued a warrant and monition authorizing the seizure from the Lottery Commission of "such one-sixth share of the gross amount otherwise due and payable to Michael Linskey." Both the complaint and the warrant defined the defendant res as "the one-sixth share of James J. Bulger in all present and future proceeds of Mass Millions Lottery Ticket No. M246233, registered in the name of Michael Linskey." The seizure was widely reported in the media and was front-page news in both of Boston's major newspapers.

Whitey Bulger never appeared to contest the lottery forfeiture. Later evidence established his awareness of the forfeiture action. His sister, Jean Holland, filed a claim to the one-sixth share on behalf of herself and his other heirs. She also asked the state probate court to appoint her as his receiver, but the request was rejected. Since she was not his receiver, the federal court dismissed Holland's claim for lack of standing. This court affirmed the dismissal for lack of standing in an unpublished opinion. United States v. One-Sixth Share, 101 F.3d 106 (table), 1996 WL 662459 (1st Cir.1996) (per curiam). Holland pursued her state litigation to be appointed as Whitey Bulger's receiver for several more years; it was finally dismissed with prejudice by the Supreme Judicial Court in October 2000. John Bulger was not a party in either of these state or federal cases.

Two weeks after dismissing Holland's claim, and in the absence of any other claimants in the six months since the case was filed, the district court entered a default judgment ordering the one-sixth share forfeited to the government on January 26, 1996. The order defined the res, or "Defendant Property," in exactly the same language as the complaint and the warrant. It stated that "all other persons and entities claiming any right, title or interest in or to the Defendant Property... are held in default." It also stated, "This shall be, and is, the full and final disposition of this civil forfeiture action with regard to the Defendant Property."

The United States sought forfeiture of Whitey Bulger's other assets as well. It secured an in rem default judgment against his Florida condominium. The government also seized the funds in the account at the South Boston Savings Bank held jointly in the names of both John and Whitey Bulger; John Bulger filed a timely claim in that litigation. This court ultimately found that, because John Bulger had possession of the funds and exercised sufficient dominion and control over the joint account, he had standing to contest this forfeiture. United States v. $81,000, 189 F.3d 28, 39 (1st Cir.1999). John Bulger later reached a settlement dividing the money in the account equally between himself and the government.

The lottery ticket forfeiture case remained closed for over five years. During that time, ticket co-owner Weeks was indicted, pled guilty, and entered into a cooperation agreement with the government. In his debriefings, Weeks stated that he and Whitey Bulger had never paid anything for their shares of the winning ticket. Rather, Weeks said, they had spread the story that they were laundering money in order to assuage the temper of another criminal associate, Stephen Flemmi, who was angry at being excluded from the lottery winnings. This new information undermined the government's money-laundering theory, which it had used to demonstrate probable cause for seizure and to justify forfeiture. In February 2001, the government filed a submission with the district court which reported this new evidence, but also argued that Weeks's revelation was not a basis for disturbing the default judgment. Among other reasons, it made arguments (which we do not resolve) that there were alternative bases for civil and criminal forfeiture of the one-sixth share.

Weeks also implicated Whitey Bulger in a number of murders, including those of Davis's daughter in 1982 and Hussey's daughter in 1985. Weeks provided information that led the authorities to their bodies. A superseding indictment unveiled in September 2000 charged Whitey Bulger with these homicides. Davis and Hussey filed wrongful death actions against Whitey Bulger in state court in February 2001. Whitey Bulger has now been implicated in a total of nineteen murders.

Within a few months of the government's 2001 submission concerning the Weeks debriefings, Davis, Hussey, and John Bulger each moved in district court to set aside the default judgment forfeiting the lottery proceeds payable to Whitey Bulger.¹

The day before oral argument on these motions in the district court, Davis and Hussey went before the state judge presiding over their wrongful death actions and secured what is styled an equitable lien, subject to some limitations, on the one-sixth share. The United States was not a party in the state proceeding and did not appear, although the state court took judicial notice of the federal civil...