U.S. v. Thier

• Citation: 801 F.2d 1463
• Decision Date: 10 October 1986
• Docket Number: No. 85-4857,85-4857
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard H. THIER, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1463

801 F.2d 1463

55 USLW 2252

UNITED STATES of America, Plaintiff-Appellee, v. Richard H. THIER, Defendant-Appellant.

No. 85-4857.

United States Court of Appeals, Fifth Circuit.

Oct. 10, 1986.

As Amended on Denial of Rehearing and Rehearing En Banc Jan.

27, 1987. ^*

William W. Taylor, III, Washington, D.C., John F. Evans, G. Richard Strafer, Coral Gables, Fla., for Richard H. Thier.

Richard H. Thier, Miami Beach, Fla., pro se.

Victor Sherman, Janet Sherman, Santa Monica, Cal., for amicus curiae-Nat. Ass'n. for Criminal Defense Lawyers.

Judith A. Lombardino, D.H. Perkins, Asst. U.S. Attys., Shreveport, La., for the U.S.

Appeal from the United States District Court for the Western District of Louisiana.

Before CLARK, Chief Judge, RUBIN, and GARZA, Circuit Judges.

CLARK, Chief Judge:

Appellant challenges a restraining order that barred any disposition of his assets pending the outcome of his trial for violating the Continuing Criminal Enterprise Statute (CCE). The bases of the order were (1) the grand jury's declaration that it found the assets were forfeitable under CCE, and (2) the declaration of the prosecuting attorney that Thier was guilty of violating CCE, had profited from the violations, and had purchased the assets after the violations commenced. Because the district court failed to follow Fed.R.Civ.P. 65(b) and to consider Thier's need for necessary living expenses and reasonable attorneys fees, we remand with directions.

I

On August 23, 1985, a federal grand jury returned an indictment charging Richard H. Thier with participating in a continuing criminal enterprise at various times between January 1976 and May 1981 in violation of various provisions of Title 21. The indictment stated that specified income and property belonging to Thier arose from his participation in this enterprise or afforded a source of influence over the enterprise.

On August 28, the government requested a restraining order pursuant to the indictment and 21 U.S.C. Sec. 853(e)(1)(A) that would freeze listed assets of Thier including all of his monies. In support of this request, the government submitted the grand jury indictment and the verified declaration of Judith A. Lombardino, Assistant United States Attorney. Lombardino's declaration stated that she had actively investigated Thier, that evidence indicated Thier had participated in and profited from a marijuana smuggling organization, and that Thier accumulated the named assets and ninety-five percent of his income between 1978 and 1983 as profits from this narcotics trafficking. The prosecutor also declared that Thier had been attempting to sell his home since February 1983.

The district court issued an ex parte restraining order that same day. The order prohibited any sale, transfer or disposition of the listed assets and "[a]ll monies in the possession, custody or control of RICHARD H. THIER." The court found that the government had alleged facts sufficient to indicate it was likely to prevail at trial, and that without the order, Thier might frustrate justice and endanger the government's interest in these properties by placing them beyond the jurisdiction of the court. The order was to remain in effect until further order by the court. It was served on Thier and his counsel on August 29, 1985.

In the period from September 12 to 16, 1985 Thier filed a series of motions seeking to exempt from the restraining order attorneys fees and ordinary and necessary living expenses. On September 19, 1985, Thier sought a hearing on several matters including a modification of the restraining order in accord with his prior motions. The hearing was held on September 25, 1985, and the motions were taken under advisement.

On October 30, 1985, the court denied the motion to modify. The court found that Thier was entitled to and could be adequately represented by appointed counsel, and that Congress did not intend, under 21 U.S.C. Sec. 853(e)(1)(A), to exempt the use of potentially forfeitable assets to pay a defendant's attorneys fees or living expenses.

On appeal, Thier makes three arguments: (1) the district court's restraint of his assets without affording him an adversary hearing violated his fifth amendment due process rights and his sixth amendment right to counsel; (2) the district court's failure to exempt assets to cover attorneys fees violates his sixth amendment right to counsel; (3) the district court's failure to exempt assets to cover living expenses violates his fifth amendment due process rights.

II

We first consider Thier's contention that the district court erred in failing to afford him an adversary hearing. He suggests that the post-indictment pretrial forfeiture provision of CCE is constitutionally deficient if it allows the district court to impose an unlimited restraint on a defendant's assets without an adversary hearing. The government, on the other hand, asserts that Congress properly and clearly intended to allow a district court to issue such restraints upon the filing of an appropriate indictment without further limitation. The government contends that the probable cause required for the entry of the indictment supports the issuance of a restraining order that freezes a defendant's assets and the continuation of that restraint until the conclusion of trial.

The CCE forfeiture provisions were amended in 1984 to provide in pertinent part:

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

(A) upon the filing of an indictment or information charging a violation of this subchapter or subchapter II of this chapter 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; ....

21 U.S.C. Sec. 853(e)(1)(A). Unlike subsequent provisions of Sec. 853(e) that deal with restraining orders obtained before the filing of an indictment, this section under which the judge restrained Thier's assets is silent as to the durational limits of such orders and as to any notice or hearing requirements. Compare 21 U.S.C. Sec. 853(e)(1)(A) with 21 U.S.C. Secs. 853(e)(1)(B)-(3) (allowing the issuance of a ninety-day pre-indictment restraining order after notice, hearing and appropriate determinations by the court, or an ex parte ten-day preindictment temporary restraining order after certain showings by the movant and determinations by the court). The legislative history indicates that Congress thought that prior notice and a hearing should not be required for a post-indictment restraining order because the indictment itself furnished notice of the government's intent to seek forfeiture, and there would be a strong need to quickly obtain a restraining order before assets could be concealed. S.Rep. No. 225, 98th Cong., 2d Sess. 203, reprinted in 1984 U.S.Code Cong. & Ad.News 3182, 3386. The legislative history does not discuss whether there is a need for a hearing after a restraining order is issued.

The corresponding pre-amendment provision allowed district courts to enter "restraining orders or prohibitions, ... in connection with any property or other interest subject to forfeiture under this section, as they shall deem proper." 21 U.S.C.A. Sec. 848(d) (1981). Numerous federal courts have held that restraining orders and injunctions issued pursuant to this section were subject to procedural requirements such as those in Fed.R.Civ.P. 65. See, e.g., United States v. Lewis, 759 F.2d 1316, 1324-25 (8th Cir.1985) cert. denied, --- U.S. ----, 106 S.Ct. 406, 88 L.Ed.2d 357 (1985); United States v. Spilotro, 680 F.2d 612, 617 (9th Cir.1982) (interpreting identical provision in RICO); United States v. Long, 654 F.2d 911, 915 (3d Cir.1981). Few courts have addressed this issue since the 1984 amendments.

In United States v. Crozier, 777 F.2d 1376 (9th Cir.1985), the court ultimately dealt with the amended version of Secs. 853(e), (n). There, the district court had denied without a hearing the motions of the defendant and a third party to dissolve a post-indictment pretrial restraining order. When the matter was considered by the Ninth Circuit on the merits, it held that CCE was "unconstitutional on its face because Congress failed to provide for a hearing on a restraining order before trial or conviction." Id. at 1383. Finding that Fed.R.Civ.P. 65 controlled the order in the absence of valid procedural guidelines, the court vacated the order and remanded with instructions to the district court to hold a hearing in accordance with that rule. Id. at 1384.

In United States v. Rogers, 602 F.Supp. 1332 (D.Colo.1985), the court denied a motion for a post-indictment pretrial restraining order under the forefeiture provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sec. 1963(e)(1)(A). This amended provision is identical to the amended 21 U.S.C. Sec. 853(e)(1)(A). Rogers relied on an assumption that Congress was aware of and had adopted pre-amendment case law, and on legislative history, to analogize the procedural limits on the forfeiture provision to Fed.R.Civ.P. 65. 602 F.Supp. at 1343-44. Rogers held that while the statute allows the entry of an ex parte restraining order of short duration, the entry of any injunction required an adversary hearing. Id. at 1343-45. The Rogers court stated that the defendant could not use the hearing to attack the indictment, but it required the government to present additional evidence of the strength of its case to justify an injunction. Id. at 1345. Following these guidelines, the court exercised the discretion granted by the statute and denied the government's request for a restraining order. Id....