United States v. Rogers, 84-CR-337.

Citation602 F. Supp. 1332
Decision Date22 February 1985
Docket NumberNo. 84-CR-337.,84-CR-337.
PartiesUNITED STATES of America, Plaintiff, v. Gerald Leo ROGERS, aka T.T. Smith III, Claude de Bleu, Allan J. Martin, James F. Stokes, J.R. Kingston, and Ambrose I. Goldsmith, Gary W. Coomber, Mario Fonseca-Lopez, and Arnold P. Lepone, Defendants.
CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado


Richard J. Nolan, Edward J. Timmins, Asst. U.S. Attys., Denver, Colo., for plaintiff.

John B. Moorhead, Baker & Hostetler, Denver, Colo., Jeffrey S. Gordon, Jan B. Norman, Los Angeles, Cal., for Rogers.

E. Michael Canges, Canges & Volpe, Denver, Colo., for Lepone.

Raymond J. Takiff, Conconut Grove, Fla., for Fonseca-Lopez.

Laurence B. Finegold, Franco, Asia, Bensussen, Coe & Finegold, Seattle, Wash., for Coomber.

William J. Genego, University of Southern California Law Center, University Park, Los Angeles, Cal., Alan Ellis, Ellis, Fogelnest & Newman, P.C., Philadelphia, Pa., Sam Buffone, Washington, D.C., for Natl. Assoc. of Cr. Def. Lawyers.


KANE, District Judge.

This is a case of first impression. No other court has yet ruled on the issues presented concerning the Comprehensive Forfeiture Act of 1984. After eighteen months of investigation and deliberation, a grand jury of the District of Colorado returned a thirty count indictment in this case on November 29, 1984. The indictment charges the named defendants with mail fraud, racketeering, fraudulent interstate transactions, aiding the filing of false or fraudulent tax returns, conspiracy to obstruct justice, subornation of perjury and perjury. Additionally, the indictment alleges forfeitures under the Comprehensive Forfeiture Act of 1984, Pub.L. No. 98-473, § 302, 98 Stat.1976, 18 U.S.C. § 1963. On the next day, November 30, 1984, the grand jury filed a "Superceding (sic) Indictment" which contained the identical counts plus an additional paragraph in the forfeiture allegations following Count XI. This paragraph lists the entities which are subject to the forfeiture allegations.

Contemporaneous with the filing of the indictment on November 29, 1984, the government filed an unverified document entitled "Petition For An Order Restraining A Transfer Or Other Disposition Of Property Or Other Financial Interests In Certain Financial Enterprises." On December 3, 1984, the government filed a supplement to the petition which made reference to the intervening "Superceding (sic) Indictment."

Counsel for defendants Rogers and Coomber have made conditional appearances. They have filed objections to the government's petition for a restraining order and motions to exclude attorney fees and costs from forfeiture. In these motions, defendants argue that the provisions of the newly enacted amendments to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), embodied in the Comprehensive Forfeiture Act of 1984, do not provide for the forfeiture of assets transferred by defendants to their attorneys for legitimate services performed. Alternatively, defendants argue that the amendments are unconstitutional. They raise five basic points as follows: first, the government's proposed order denies them due process in that an injunction cannot enter without a hearing and the motion is impermissibly vague; second, newly amended sections 1963(a)(3) and (c) of title 18 are impermissibly vague thus failing to comport with the requirements of due process; third, section 1963(a)(3) and (c) are ex post facto laws as applied to these defendants; fourth section 1963(m) is impermissibly vague and denies third parties their right to trial by jury; finally, application of section 1963 forfeiture provisions to attorney fees denies defendants due process and the right to counsel.

Standing and Ripeness

The government argues that defendants do not have standing to challenge the validity of § 1963(m), which deals with post-trial claims of third-parties to assets ordered forfeit. The government also argues that the effect of those sections is not ripe for judicial review.

Ripeness and standing both derive from the case in controversy limitations of Article III. Additionally, for prudential reasons, courts decline to hear cases where there is no extant claim sharply focused by adverse litigants with clear and concrete interests in the outcome. See generally, Carstens v. Lamm, 543 F.Supp. 68, 76 (D.Colo.1982). Where defendants can show no present injury and the effect of the law is no more than speculative, their claims are not ripe. The government is correct in its assertion that defendants do not have standing for general consideration of the provisions of section 1963(m) and the claims they posit are not ripe. As a general rule, individuals do not have standing to assert the rights of third parties not involved in the litigation. See Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 166-68, 92 S.Ct. 1965, 1968-69, 32 L.Ed.2d 627 (1972). Defendants present no factually specific setting in which the claims of third parties to forfeitable assets arise. Thus, the claims attributed to third parties are not ripe.

When the actions related to the third party directly impinge upon the rights of the party to the action, however, that party has standing to assert his own rights. See Taylor v. Louisiana, 419 U.S. 522, 526, 95 S.Ct. 692, 695, 42 L.Ed.2d 690 (1975) (Criminal defendant may assert his own constitutional claim that exclusion of women from jury service deprived him of the type of factfinder to which he was entitled); Otero v. Mesa County Valley School Dist., 568 F.2d 1312, 1314-15 (10th Cir.1977) (Mexican American children have standing to assert that discriminatory hiring of teachers denies them educational opportunities). The defendants allege that the prospective requirements placed upon third party claimants have the effect of presently constraining their own constitutional rights of due process and right to counsel. Defendants have standing to litigate these claims which are now ripe.

Defendants do not, however, have standing to litigate the potential claims of third parties relating to vagueness and right to jury. In some instances courts have recognized exceptions to the standing requirements and have allowed vendors to assert the rights of their customers. See, e.g., Craig v. Boren, 429 U.S. 190, 192-97, 97 S.Ct. 451, 454-57, 50 L.Ed.2d 397 (1976). In those cases the third party's interests were closely associated with the interests of the vendor, to the extent that the buyers were relegated to a secondary role in the litigation. This is not the case here. These defendants are not asserting claims of third party buyers associated with a continuous and ongoing enterprise wherein the statute could impair the seller's business operations and financial interests. Here defendants are only concerned with sales occurring during the limited period of time between indictment and trial.

The statutory constraints on third party buyers affect only sporadic sales occurring incidentally in the course of defendants' businesses. The rights of third parties which defendants seek to address do not relate to a challenge to the validity of forfeitures in general. Defendants are concerned only with the ancillary issues relating to the appropriateness of the mechanisms provided third parties to protest forfeitures. While forfeitures, in general, may have a chilling effect on defendants' business interests, there is no indication that the procedures established in subsection (m) materially add to any interest of defendants.

The justifications underlying the standing requirements militate against recognizing the defendants' right to assert the rights of third parties. There is little incentive for defendants to litigate vigorously the claims of third parties. Nor is there any basis to presume that defendants will be more effective advocates than the third parties themselves. See Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 80, 98 S.Ct. 2620, 2634, 57 L.Ed.2d 595 (1978). There is no need to adjudicate the hypothetical claims of third parties which may never arise. See Singleton v. Wulff, 428 U.S. 106, 113-14, 96 S.Ct. 2868, 2873-74, 49 L.Ed.2d 826 (1976). Finally, there is no obstacle to the third parties asserting their own rights. No additional lawsuits need be filed, as subsection (m) establishes a forum in which the third parties may appear.

Statutory Amendments

RICO, first enacted October 15, 1970, created substantial penalties in the form of in personam forfeitures of the fruits of racketeering activity. In the eleventh hour of the 98th Congress, the RICO forfeiture provisions were amended to add more teeth to government attacks on racketeering and to clear up legal disputes among the circuit courts. The Comprehensive Crime Control Act of 1984, which included the Comprehensive Forfeiture Act of 1984, amending RICO, was so hastily passed that not all of the Act's pages were included in the copy provided the President for his signature on October 12, 1985. The exact contents of the Act were so uncertain that portions of the bill not enacted were included in the United States Code Annotated advance sheet of the law.1 Despite the sparseness of the legislative history, however, the forfeiture provisions of RICO were substantially amended and each of the changes merits careful analysis.

The original version of 18 U.S.C. § 1963 and the relevant portions of the 1984 amendments are laid out in the table below.

                                                RICO PENALTY PROVISIONS
                                                   18 U.S.C. § 1963
                OLD STATUTE                                              NEW STATUTE
                (a) Whoever violates any provision of section            (a) Whoever violates any provision of section
                1962 of this chapter shall be fined not more than        1962 of this chapter shall be fined not more than

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