United States v. Reckmeyer, Crim. No. 85-00010-A.
| Decision Date | 27 March 1986 |
| Docket Number | Crim. No. 85-00010-A. |
| Citation | 631 F. Supp. 1191 |
| Parties | UNITED STATES of America v. Christopher F. RECKMEYER, II, et al. |
| Court | U.S. District Court — Eastern District of Virginia |
Peter Van N. Lockwood, Caplin & Drysdale, Chartered, Washington, D.C., for petitioners.
Kent Robinson, Asst. U.S. Atty., Alexandria, Va., for U.S.
This matter is before the court on the Petition of the law firm of Caplin & Drysdale Chartered ("Caplin & Drysdale") who seek a modification of the forfeiture order entered by the court on May 17, 1985, to permit payment of defendant Christopher Reckmeyer's attorneys' fees. This case presents a conflict between the forfeiture of drug related assets under the Comprehensive Forfeiture Act of 1984 and a defendant's right to counsel under the Sixth Amendment to the Constitution. For the reasons set forth below, the Petition is granted.
The basic facts are not in dispute.
The law firm of Caplin & Drysdale began representing Christopher Reckmeyer in the summer of 1983, in connection with a grand jury investigation of drug trafficking activities in the Eastern District of Virginia which culminated in an indictment issued against Reckmeyer and twenty-five other individuals on January 15, 1985. As of December 31, 1984, Reckmeyer owed Caplin & Drysdale $26,444.97 for services rendered and costs incurred through that date.
On January 14, 1985, this court issued an Order pursuant to an ex parte application by the government which restrained the transfer of assets by Reckmeyer and others. On January 25, 1985, Christopher Reckmeyer surrendered. At his request, Caplin & Drysdale continued to represent him in his defense of the indictment. On March 14, 1985, Christopher Reckmeyer plead guilty to Count 2 — engaging in a continuing criminal enterprise, in violation of 21 U.S.C. § 848. He also plead guilty to Counts 26 and 31, which charged violations of Federal tax laws.
On March 15, 1985, oral argument was held before Judge Bryan of this court on Reckmeyer's motion filed on March 7, 1985, for an order modifiying the restraining order of January 14, 1985, to exclude attorneys' fees from forfeiture. Judge Bryan denied this motion on March 15, 1985, on the ground that Reckmeyer had plead guilty to Count 2 on the previous day. Judge Bryan stated, however, that Caplin & Drysdale could, on its own behalf, raise the issue of forfeitability of attorneys' fees in the context of a third-party petition.
On May 17, 1985, Reckmeyer was sentenced to a period of incarceration, and a Forfeiture Order was entered listing virtually all assets possessed by Reckmeyer, including real estate, gems and $200,000 in United States currency. The Forfeiture Order specifically included:
29. All monies and funds restrained by January 14, 1985, restraining order entered in the above styled case, including but not limited to the approximately $25,000 held in escrow by Bernard S. Bailor a member of the law firm of Caplin & Drysdale and/or his agents.
Forfeiture Order dated 5/17/85.
In defending the charges against Reckmeyer, Caplin & Drysdale incurred the following expenses and time charges:
a. Disbursement for the
retention of Stanley J. Reed of
Lerch, Early, Roseman &
Frankel to assist in
Reckmeyer's defense. Mr
Reed was retained in order to
comply with the requirements
of Canon 6, ABA Code of
Professional Responsibility
because Caplin & Drysdale was
not experienced in defense of
drug cases. (Exhibit G.) $ 46,975.54
b. Other disbursement in
connection with the defense
(duplicating, telephone
investigators, etc.) (Exhibit H). $ 14,313.95
c. Caplin & Drysdale attorney
time charges. (Exhibit H). $109,223.50
___________
Total Expenses $170,512.99
___________
In rendering these services to Reckmeyer, Caplin & Drysdale was a good faith provider of services for value. Caplin & Drysdale has not been paid for these charges because of the restraining and forfeiture orders which encompassed all of Christopher Reckmeyer's assets. Pursuant to 21 U.S.C. § 853(n)(2), Caplin & Drysdale filed its Petition to the court for a hearing to adjudicate the validity of their interest in the forfeited assets.
Caplin & Drysdale argues that the forfeiture statute was not intended to reach legitimate attorney's fees, and therefore they are entitled to be paid the fees and costs incurred in representing Christopher Reckmeyer. They further argue that any construction of the forfeiture statute which reaches legitimate attorney's fees would violate a criminal defendant's Sixth Amendment Right to Counsel. The government argues that the attorneys only have standing to contest the forfeiture of $25,444.97 actually delivered to them by Reckmeyer but do not have standing to contest the balance owed by Reckmeyer. They further argue that the forfeiture statute can be plainly read to encompass attorney's fees and that the court should not order the government to pay the defendant's attorney of choice out of funds which rightly belong to the government under the relation-back principle of Section 853(c).
Under the Forfeiture Act, the disposition of third-party claims is governed by 21 U.S.C. § 853(n)(6). This section provides:
The government argues that petitioners do not have standing to contest the Order of Forfeiture under Section 853(n)(6). The government position is that petitioners cannot claim either a superior right, title or interest "at the time of the commission of the acts which gave rise to the forfeiture," 21 U.S.C. § 853(n)(6)(A), or that they are "bona fide purchasers for value" who were "reasonably without cause to believe that the property was subject to forfeiture," 21 U.S.C. § 853(n)(6)(B).
The legislative history of the criminal forfeiture statute provides: "Third parties who assert claims to criminally forfeited property, which in essence are challenges to the validity of the order of forfeiture, are entitled to a judicial determination of their claim." S.Rep. No. 225, 98th Cong., 1st Sess. 208 (1983), U.S.Code Cong. & Admin.News 1984, pp. 3182, 3391. It is clear from the Senate Report that petitioners' claims fall within the scope of persons which Congress recognized as being "entitled to a judicial determination of their claim," even though they cannot specifically make a claim for relief under Section 853(n)(6). The court having found petitioners to be a good faith provider of services, it follows that they have a legal interest in the property forfeited. Their status is, at least, equal to that of a general creditor, and therefore the court finds that they do have standing to present their claims.1
The court having found that the petitioners have standing, the question before the court is whether counsel fees and costs are exempt from forfeiture under the Comprehensive Forfeiture Act of 1984, 21 U.S.C. § 853.
Four other district courts have addressed this issue, albeit in a pretrial context. In United States v. Rogers, 602 F.Supp. 1332 (D.Col.1985), the government filed a petition for an order restraining transfer of property by defendants under an indictment alleging forfeiture under the Comprehensive Forfeiture Act of 1984. The court held that attorney's fees received in return for services legitimately rendered and not as part of an artifice or sham to avoid forfeiture were not subject to the forfeiture provisions. In In re Grand Jury Subpoena Duces Tecum Dated January 2, 1985, 605 F.Supp. 839 (S.D.N.Y.1985), the court refused to quash a government subpoena seeking information regarding defense counsel's fee arrangement with defendant in order to obtain information regarding potentially forfeitable assets. In addressing the question of forfeitability, the court, specifically declining to follow Rogers, held that the government is entitled to a preliminary order restraining attorney's fees under the Comprehensive Forfeiture Act. In United States v. Badalamenti, 614 F.Supp. 194 (S.D.N.Y.1985), the court, in ruling on a defendant's motion to quash a trial subpoena duces tecum served upon defense counsel, held that the government may not seek a special verdict as to the forfeiture of attorney's fees under 18 U.S.C. § 1963 or 21 U.S.C. § 853 and may not rely on forfeiture in support of the subpoena at issue. Finally, in United States v. Ianniello, 85 Cr. 115 (S.D.N.Y. Sept. 3, 1985) (slip op.) the defendants sought and obtained an order declaring that attorneys' fees are exempt from forfeiture under 18 U.S.C. § 1963.2
This court agrees with the reasoning of the Rogers, Badalamenti, and Ianniello courts, and does not believe that Congress intended that the Comprehensive Forfeiture Act of 1984 would encompass bona fide legal fees paid to a criminal defendant's attorney. Such an application of the Act would in all likelihood violate the Sixth Amendment while not furthering any Congressionally desired...
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