U.S. v. South Half of Lot 7 and Lot 8, Block 14, Kountze's 3rd Addition to the City of Omaha
| Decision Date | 08 August 1989 |
| Docket Number | No. 88-2212,88-2212 |
| Citation | 876 F.2d 1362 |
| Parties | UNITED STATES of America, Appellant, v. The SOUTH HALF OF LOT 7 AND LOT 8, BLOCK 14, KOUNTZE'S 3RD ADDITION TO THE CITY OF OMAHA, etc., et al, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Steven A. Russell, Asst. U.S. Atty., Lincoln, Neb., for appellant.
James Davis, Omaha, Neb., for appellees.
Before HEANEY and FAGG, Circuit Judges, and HANSON, * Senior District Judge.
The government appeals the order of the District Court, the Honorable Lyle E. Strom presiding, dismissing 13 separate forfeiture actions involving real property brought by the government pursuant to 18 U.S.C. Sec. 1955(d). The District Court held that real property was not subject to forfeiture under section 1955(d) and that it was inconceivable that the government had authority under this law to seize real property as it had in these cases. We find that real property is excluded from the reach of section 1955(d) and that the procedure used to seize the real property in these cases was constitutionally deficient. Accordingly, we affirm the order of the District Court.
In early March of 1988 the United States filed 13 complaints for forfeiture against certain real properties in Omaha, Nebraska, alleging that the properties, which included personal residences, were used in violation of 18 U.S.C. Sec. 1955. All of the complaints were identical in format. Each contained only a general nonspecific allegation, predicated on information and belief, of how the property was being used in violation of section 1955. Specifically, paragraph six of each complaint alleged simply that the property involved "with its buildings and appurtenances was used for the purpose of conducting, financing, managing, supervising, directing and owning all or part of an illegal gambling business as listed in paragraph 5 above." Paragraph five added little more, merely stating that the owner of the property "was engaged in the conducting, financing, managing, supervising, directing and owning all or part of an illegal gambling business in violation of Title 18, United States Code, Section 1955." These two conclusory sentences, devoid of any specifics, provided the only rationale for the seizures.
On the basis of these cursory allegations a deputy clerk for the United States District Court for the District of Nebraska issued a Warrant for Arrest of Property in each case directing the United States Marshal to seize the named properties. The record indicates that the deputy clerk issued the warrants without any type of probable cause determination by a judicial officer or any type of preseizure hearing. The marshal complied with these warrants and seized the named properties.
Five months after the seizures the District Court entered its order dismissing the complaints and releasing the properties. There is no indication in the record of whether the inhabitants of the personal residences involved had been forced from their homes during this five month period. Judge Strom based the dismissal on his finding that "the words 'any property' in section 1955 do not encompass real property and such property was not intended by Congress to be the subject of forfeiture action." Judge Strom also held that it was "inconceivable that the intent of Section 1955 was to allow the government to seize a person's home as in these cases."
The statute relied upon by the government as authorization for the seizures states Prohibition of illegal gambling businesses
(a) Whoever conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business shall be fined not more than $20,000 or imprisoned not more than five years, or both.
(b) As used in this section--
(1) "illegal gambling business" means a gambling business which--
(i) is a violation of the law of a State or political subdivision in which it is conducted;
(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and
(iii) has been or remains in substantially continuous operations for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.
(2) "gambling" includes but is not limited to poolselling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein. * * *
(d) Any property, including money, used in violation of the provisions of this section may be seized and forfeited to the United States. All provisions of law relating to the seizure, summary, and judicial forfeiture procedures, and condemnation of vessels, vehicles, merchandise, and baggage for violation of the customs laws; the disposition of such vessels, vehicles, merchandise, and baggage or the proceeds from such sale; the remission or mitigation of such forfeitures; and the compromise of claims and the award of compensation to informers in respect of such forfeitures shall apply to seizures and forfeitures incurred or alleged to have been incurred under the provisions of this section, insofar as applicable and not inconsistent with such provisions. Such duties as are imposed upon the collector of customs or any other person in respect to the seizure and forfeiture of vessels, vehicles, merchandise, and baggage under the customs laws shall be performed with respect to seizures and forfeitures of property used or intended for use in violation of this section by such officers, agents, or other persons as may be designated for that purpose by the Attorney General. * * *
18 U.S.C. Sec. 1955 (1982).
The government argues that the District Court should be reversed on the grounds that 1955(d) authorizes the forfeiture of real property by the phrase, "[a]ny property, including money, used in violation of the provisions of this section may be seized and forfeited to the United States." Appellees counter that Congress intended this language only to reach personal property. Appellees also assert that section 1955(d) is a criminal, rather than civil, forfeiture provision which accords them rights they were not given. No criminal charges or indictments had been brought under 1955 against any of the owners of the seized real property at the time this case was submitted.
The question of whether the forfeiture provisions of 18 U.S.C. Sec. 1955 reach real property is an issue of first impression in this circuit. The statute was passed as part of The Organized Crime Control Act of 1970, Pub.L. No. 91-452, but has previously only been used in this circuit as authority for the seizure of the equipment and money used in illegal gambling enterprises. Attempts in other circuits to use the law to reach real property have had limited success. See United States v. Premises and Real Property 614 Portland, 846 F.2d 166, 167 (2nd Cir.1988), aff'g 670 F.Supp. 475 (W.D.N.Y.1987) (real property forfeitable); United States v. Bonanno Organized Crime Family, 683 F.Supp. 1411, 1460 (E.D.N.Y.1988) (real property forfeitable); United States v. Various Denominations of Currency, 628 F.Supp. 4, 8 (S.D.W.Va.1984) (real property forfeitable); United States v. Bldg. & Prop. Known as 123, etc., 527 F.Supp. 1167, 1168 (W.D.Pa.1981) (); DiGiacomo v. United States, 346 F.Supp. 1009, 1012 (D.Del.1972) ().
We begin our analysis of whether the forfeiture provisions of section 1955(d) reach real property by recognizing that "[f]orfeitures are not favored; they should be enforced only when within both letter and spirit of the law." United States v. One Ford Coach, 307 U.S. 219, 226, 59 S.Ct. 861, 865, 83 L.Ed. 1249 (1938). Thus, courts faced with a novel or expansive reading of a forfeiture provision must review both the language of the statute and its legislative history to insure that such an expansion fits within both the "letter and spirit of the law." We look first to the letter of section 1955.
The main argument offered by the government for the proposition that real property is forfeitable under this law is simple, but powerful. The statute, by its terms, states that "[a]ny property, including money, used in violation of the provisions of this section may be seized and forfeited to the United States." Thus, the government argues, as the general meaning of the phrase "any property" would include real property, the statute should be read as reaching real property.
Appellees contend that the plain meaning argument fails on several counts. First, they argue that it fails to acknowledge that the statute adopts the provisions of the customs laws, which relate only to personal property, to provide the mechanics for any forfeitures. Appellees also assert that because Congress routinely specifies that a forfeiture provision reaches real property when it intends such an outcome, the lack of such specificity in this statute is evidence that it did not intend the law to reach real property. Finally, appellees argue that the decision of Congress not to amend section 1955 to specifically include real property when it made such amendments to related laws is evidence that the provision is not intended to reach real property. We will examine each of these arguments in the order they are presented above.
We find that appellees' argument concerning section 1955's incorporation of the customs laws' forfeiture mechanisms does have some merit. By their nature, the customs procedures adopted by the statute involve personal and not real property. See, Bonanno, 683 F.Supp. at 1459; DiGiacomo, 346 F.Supp. at 1011. They are neither structured nor well tailored for the forfeiture of real property. Consequently, it would make little sense for Congress to incorporate these provisions...
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