U.S. v. Ripinsky, s. 93-50369

• Decision Date: 30 March 1994
• Docket Number: 93-50654,Nos. 93-50369,s. 93-50369
• Citation: 20 F.3d 359
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Juri RIPINSKY, Defendant-Appellant. (Two Cases)
• Court: U.S. Court of Appeals — Ninth Circuit

Page 359

20 F.3d 359

UNITED STATES of America, Plaintiff-Appellee, v. Juri RIPINSKY, Defendant-Appellant. (Two Cases)

Nos. 93-50369, 93-50654.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 5, 1993.

Submission Withdrawn Feb. 3, 1994.

Resubmitted March 24, 1994.

Decided March 30, 1994.

Ellen R. Meltzer, U.S. Dept. of Justice, Washington, DC, for plaintiff-appellee.

Jed S. Rakoff, Fried, Frank, Harris, Shriver & Jacobson, Los Angeles, CA, for defendant-appellant.

Appeals from the United States District Court for the Central District of California.

Before: FLETCHER, PREGERSON, and NORRIS, Circuit Judges.

FLETCHER, Circuit Judge:

Juri Ripinsky appeals two separate district court orders, the first issued May 21, 1993, converting an ex parte restraining order into a preliminary injunction, the second issued August 11, 1993, converting a second ex parte restraining order into a preliminary injunction. Each restraint is pursuant to 21 U.S.C. Sec. 853 but involves assets different from the other. As to each, Ripinsky argues that the government may not subject substitute assets to pretrial restraint and that the district court improperly relied solely on the indictment and hearsay evidence at the post-restraint hearing in violation of the due process and the confrontation clauses of the Constitution. We reverse the district court's decisions and vacate the orders on the grounds that 21 U.S.C. Sec. 853 does not permit the pretrial restraint of substitute assets.

FACTS

On April 29, 1993, a federal grand jury returned an indictment charging Ripinsky and two other defendants with violations of conspiracy, bank fraud, wire fraud, money laundering, and forfeiture statutes involving sums of approximately $2.3 million. The indictment alleged that Ripinsky and his codefendants entered into joint venture agreements with several banks to purchase, develop, and sell commercial real estate projects. The defendants allegedly defrauded the banks by inducing the institutions to release funds based on false representations and diverting those funds for their own benefit.

On the same day that the indictment was returned, the government obtained an ex parte temporary restraining order freezing assets valued at $1,745,500 held by Ripinsky in England. These assets would be subject to criminal forfeiture if Ripinsky were convicted of the money laundering charges. Neither party contends that the restrained assets were involved in the alleged crimes or that they are traceable to property that was involved. Instead, all parties agree that the assets are unconnected to the money laundering charges.

On May 17, 1993, the government moved to convert the ex parte temporary restraining order into a preliminary injunction and on May 19, 1993, a hearing was held pursuant to this motion. In a motion opposing a preliminary injunction, Ripinsky objected to the pretrial restraint of substitute assets. On May 21, 1993, the district court issued the injunction on the same terms as the original temporary restraining order. Ripinsky timely filed a notice of appeal on May 21, 1993.

On May 27, 1993, the grand jury returned a superseding indictment virtually identical to the original indictment except that it replaced four of the money laundering charges (Counts 16-19) with one new money laundering charge (Count 21).

On May 29, 1993, the government filed a motion to modify the preliminary injunction in accordance with the superseding indictment. The government sought to release $1,473,000 of the $1,745,500 restrained under Counts 16-19 of the original indictment and the May 21 order, and to restrain an additional $745,000 under the new money laundering charge.

On June 3, 1993, the district judge ordered the $1,473,000 returned to Ripinsky, leaving $272,500 subject to restraint under the first injunction. The district judge also entered a temporary restraining order freezing $745,000 of substitute assets under the superseding indictment. Thus, the first preliminary injunction restrains $272,500.

The government subsequently moved to convert the second temporary restraining order into a preliminary injunction and on June 24, July 8, July 22, and August 11, 1993, the district court held post-restraint hearings pursuant to this motion. On August 11, 1993, the district court issued the injunction on the same terms as the restraining order. Thus, the second preliminary injunction restrains $745,000 in addition to the $272,500 restrained under the first preliminary injunction. Ripinsky timely filed a notice of appeal challenging this second preliminary injunction.

After Ripinsky appealed to this court challenging the second preliminary injunction, he filed a motion with this court to assign the second appeal to the same panel. Because both appeals raise an identical issue of statutory interpretation, we have accepted the assignment and consolidated the appeals. Thus, both the first injunction that restrains $272,500 and the second injunction that restrains $745,000 are before us.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction of this case pursuant to 18 U.S.C. Sec. 3231. We have jurisdiction pursuant to Sec. 1292(a)(1). A pretrial order restraining assets is a preliminary injunction for procedural purposes and is therefore appealable as such. United States v. Roth, 912 F.2d 1131, 1133 (9th Cir.1990).

The interpretation of a statute is a question of law reviewed de novo. United States v. Chatman, 869 F.2d 525, 527 (9th Cir.1989).

I.

Ripinsky was indicted for money laundering in violation of 18 U.S.C. Sec. 1957. Upon conviction, the government is authorized to seize Ripinsky's forfeitable assets pursuant to 18 U.S.C. Sec. 982, which authorizes forfeitures for violations of Sec. 1957. Section 982 incorporates the procedures for criminal forfeitures provided in 21 U.S.C. Sec. 853. ¹ This case therefore involves the interaction of various subsections of Sec. 853.

The law is clear that upon conviction, the government may seize forfeitable assets of the defendant. 18 U.S.C. Sec. 982 & 21 U.S.C. Sec. 853. Forfeitable assets are defined in Sec. 982(a) to include all real or personal property involved in the underlying offense and all property traceable to such property. 18 U.S.C. Sec. 982(a)(1). The government may also restrain forfeitable assets prior to conviction if it appears that the defendant may otherwise transfer or conceal those assets by While it is clear that upon conviction the government may seize substitute assets if the forfeitable assets are unavailable, the question in this case is whether the government may restrain substitute assets prior to conviction. This is an issue of first impression in our circuit. Those circuit courts that have considered this issue have come to opposite conclusions. Compare In re Assets of Martin, 1 F.3d 1351 (3d Cir.1993) (substitute assets are not subject to pretrial restraint under 18 U.S.C. Sec. 1963) and United States v. Floyd, 992 F.2d 498 (5th Cir.1993) (substitute assets are not subject to pretrial restraint under 21 U.S.C. Sec. 853) with In re Billman, 915 F.2d 916 (4th Cir.1990), cert. denied, 500 U.S. 952, 111 S.Ct. 2258, 114 L.Ed.2d 711 (1991) (substitute assets are subject to pretrial restraint under 18 U.S.C. Sec. 1963) and United States v. Regan, 858 F.2d 115 (2d Cir.1988) (suggesting similar result under 18 U.S.C. Sec. 1963 and holding that assets related to underlying crime that were transferred to third party are subject to pretrial restraint). ³

the time of conviction. 21 U.S.C. Sec. 853(e). Finally, the law provides that if, upon conviction, forfeitable assets are unreachable by the government, the court shall order the forfeiture of substitute assets: property of the defendant that is not connected to the underlying crime. 21 U.S.C. Sec. 853(p). ²

II.

As a preliminary matter, we must determine if Ripinsky's appeals have been rendered moot by events that have occurred since he appealed. On February 4, 1994, a jury found Ripinsky guilty on all of the counts with which he was charged. The government argues that this jury verdict renders Ripinsky's appeal moot because, upon conviction, Ripinsky's assets will be forfeitable pursuant to 18 U.S.C. Sec. 982(a)(1), which authorizes the seizure of property at the time of sentencing.

We conclude that this claim is not moot. A claim becomes moot only when "the issues are no longer live or the parties lack a legally cognizable interest in the outcome." Sample v. Johnson, 771 F.2d 1335, 1338 (9th Cir.1985), cert. denied, 475 U.S. 1019, 106 S.Ct. 1206, 89 L.Ed.2d 319 (1986); see also Reimers v. Oregon, 863 F.2d 630, 632 (9th Cir.1988). In this case, the judgment of conviction has not yet been entered against Ripinsky and will be entered only after sentencing, which is currently scheduled for May 1994. Until the judgment of conviction is entered, the sole legal basis for continuing to restrain Ripinsky's assets are the two pretrial restraining orders that are the subject of this appeal. Therefore, until the judgment of conviction is actually entered, the question of whether Sec. 853(e) authorizes the government to restrain substitute assets remains a live controversy.

III.

The statute clearly states what assets are subject to pretrial restraint. Section 853(e) provides:

(e) Protective Orders

(1) Upon application of the United States, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take (A) upon the filing of an indictment or information charging a violation ... for which criminal forfeiture may be ordered under this section and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section.

any other action to preserve the availability of property described in subsection (a) of this section for forfeiture under this section--

21 U.S.C. Sec. 853(...