U.S. v. Reckmeyer
| Decision Date | 28 December 1987 |
| Docket Number | 86-5070 and 86-5089,Nos. 86-5037,s. 86-5037 |
| Citation | 836 F.2d 200 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. William J. RECKMEYER, Claimant-Appellee, and Christopher F. Reckmeyer; Robert Bruce Reckmeyer, Defendants. UNITED STATES of America, Plaintiff-Appellee, v. William J. RECKMEYER, Claimant-Appellant, and Christopher F. Reckmeyer, Defendant. UNITED STATES of America, Plaintiff-Appellant, v. REGINALD R. MILLER, INC., Claimant-Appellee, and Christopher F. Reckmeyer, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
William G. Otis, Asst. U.S. Atty. (Henry E. Hudson, U.S. Atty., Kent S. Robinson, Asst. U.S. Atty., Alexandria, Va., on brief) for plaintiff-appellant.
Nina Jean Ginsberg (Zwerling, Mark, Ginsberg & Lieberman, P.C., Alexandria, Va., on brief), Thomas Vincent Monahan (Hall, Monahan, Engle, Mahan & Mitchell Winchester, Va., on brief) for claimants-appellees.
Before PHILLIPS, ERVIN and CHAPMAN, Circuit Judges.
The government here challenges district court judgments exempting certain property from criminal forfeiture on petition by third parties pursuant to 21 U.S.C. Sec. 853(n).
Christopher Reckmeyer (Christopher) pled guilty to conducting a continuing criminal enterprise in violation of 21 U.S.C. Sec. 848. In conjunction with his plea, Christopher agreed to forfeit to the United States virtually all of his assets, both discovered and undiscovered. After the district court accepted Christopher's plea and entered the order of forfeiture, several third parties successfully petitioned the court to modify the forfeiture order to exclude assets in which they claimed an interest. This appeal by the government concerns the petitions of William Reckmeyer and Reginald C. Miller, Inc.
We affirm the judgments in favor of each of these petitioners.
William Reckmeyer is the father of Christopher and Robert Reckmeyer. On September 20, 1980, William loaned Christopher $40,000 so that Christopher could purchase a parcel of real property known as the "Shelburne Glebe." The obligation was represented by an unsecured promissory note. The funds used to advance the loan came from William's legitimate business operations. On May 8, 1981, Christopher repaid $15,000 of the debt, leaving a balance of $25,000. When the balance came due on September 20, 1981, William told Christopher that he could keep the $25,000, interest-free, in exchange for an option to receive at some point in the future, at the original purchase price, $25,000 worth of land from the Shelburne Glebe property.
On January 6, 1984, William purchased from Christopher 146.2785 acres of land known as the "Orme property." As consideration, William executed a promissory note to Christopher and Christopher's wife, Nancy, for $112,500 and paid Nancy Orme, the previous owner of the property, $157,000 to satisfy the deed of trust executed by Christopher in the original purchase.
After the district court ordered the forfeiture of all of Christopher's accounts, the Shelburne Glebe, and the Orme property, William filed third-party petitions under 21 U.S.C. Sec. 853(n) seeking to recover $25,000 from the forfeited assets and exemption of the Orme property from the forfeiture order. He did not challenge the forfeitability of the $112,500 note on the Orme property. The district court granted both petitions, subject to William's payment to the government of the balance due on the $112,500 note.
Reginald C. Miller, Inc.
Reginald C. Miller, Inc., (Miller) imports and exports precious stones. Patrick Hendry, a co-conspirator in the criminal case, is Miller's sales manager.
On September 22 and November 16, 1984, Hendry delivered two gemstones "on memorandum" to Christopher. One stone was an oval blue sapphire weighing 4.49 carats valued at $11,250 and the second stone was an oval blue sapphire weighing 5.53 carats valued at $27,650. Under the memorandum agreements, title to the stones remained with Miller and Christopher could not sell, pledge, hypothecate or otherwise dispose of the gems without first receiving express permission from Miller. Assuming they had been sold, Miller billed Christopher for these two stones on November 20 and November 29, 1984, but Christopher never paid Miller for the stones. After finding that Hendry was the only Miller employee who was aware of Christopher's drug trafficking activities and that the stones had been sold, the district court awarded Miller $38,900, the value of the two stones, from the forfeited assets.
Christopher's assets were forfeited in accordance with the provisions of 21 U.S.C. Sec. 853, which requires that persons convicted of engaging in a continuing criminal enterprise forfeit (to the government) all assets associated with or derived from the enterprise. Although Christopher at first consented to the forfeiture order as part of his plea agreement, he later challenged the forfeiture, asserting that (1) his consent was not voluntary because he did not realize that without his agreement the government would have to establish the forfeitability of each asset independently and (2) the factual basis for the forfeiture offered by the government was insufficient to support the court's acceptance of the forfeiture. The district court rejected that challenge and on an earlier appeal we affirmed, holding that Christopher's agreement to the forfeiture was knowing and voluntary and that there was a sufficient factual basis for the forfeiture.
On that earlier appeal we relied essentially upon 21 U.S.C. Sec. 853(d) which provides a rebuttable presumption that any property acquired during the course of the criminal enterprise is subject to forfeiture, and upon Sec. 853(a)(1) under which any proceeds or profits of the criminal enterprise are forfeitable. The government asserted in that earlier proceeding, without objection from Christopher, that Christopher had only insignificant legitimate income over the course of the conspiracy. It therefore appeared that all of the items at issue necessarily were purchased out of the proceeds of Christopher's illegal activity. On this basis alone we upheld the forfeiture of Christopher's assets against the direct challenge mounted in that proceeding. United States v. Reckmeyer, 786 F.2d 1216, 1222 (4th Cir.1986).
The resolution of the claims presented here is controlled by 21 U.S.C. Sec. 853 of the Continuing Criminal Enterprise Act (CCE Act), which was enacted as part of the Comprehensive Forfeiture Act of 1984. Section 853 requires that persons convicted of engaging in a continuing criminal enterprise forfeit to the United States any property associated with or derived from the profits of the criminal enterprise. Under Sec. 853(c) the interest of the United States in forfeitable property "vests" "upon the commission of the act giving rise to the forfeiture." This "relation-back" provision allows the government to reach forfeitable assets in the hands of third parties at the time of conviction. The provision was designed to prevent defendants from escaping the impact of forfeiture by transferring assets to third parties. The rights of third parties who claim an interest in forfeited property are outlined in Sec. 853(n). 1 Subsection (n) provides the only means for third parties to establish their interest in forfeited property.
Under subsection (n)(2), once an order of forfeiture has been entered, any person asserting a legal interest in the forfeited property may "petition the court for a hearing to adjudicate the validity of his alleged interest in the property." Subsection (n)(6) requires the court to amend the order of forfeiture of a petitioner demonstrates by a "preponderance of the evidence" that--
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or
(B) The petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section.
Thus subsection (n)(6) protects only two classes of petitioners, those whose legal interests in the property were superior to the defendants at the time the interest of the United States vested through the commission of an act giving rise to forfeiture and "bona fide purchasers for value" without knowledge of the forfeitability of the defendant's assets. The district court's amendments to the forfeiture order can be sustained only if we determine that William Reckmeyer and Miller fall within one of the two classes of petitioners Congress intended to protect.
Disposition of William Reckmeyer's claim to the Orme property requires only a straightforward application of the terms of Sec. 853(n)(6)(B). To retain the Orme property, William must establish that he is a "bona fide purchaser for value of [a] right, title, or interest in the property," who, at the time of purchase, was reasonably without cause to believe that the property was subject to forfeiture. The government does not dispute William's status as a "bona fide purchaser" of the Orme property or contend that the purchase was not "for value." Instead, the government asserts that the district court's factual determination that William was reasonably without cause to believe that the Orme property was subject to forfeiture is clearly erroneous.
To support its assertion that William knew the Orme property was forfeitable the government presented the following evidence. William knew approximately one month before he...
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...hearing. The Fourth Circuit Court, unfortunately, did not address the basis for its appellate jurisdiction. See United States v. Reckmeyer, 836 F.2d 200 (4th Cir. 1987). 47. 21 U.S.C. § 853 deals with criminal forfeiture in narcotics cases brought under the Continuing Criminal Enterprise st......
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