United States v. Veon, No. CR. S-81-172A-LKK.

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
Writing for the CourtHoward Hertz, Berkeley, Cal., for Ricky Brooks
Citation538 F. Supp. 237
PartiesUNITED STATES of America, Plaintiff, v. Daniel VEON aka Danny Veon aka Daniel Dee Veon aka Daniel Martin; Mark Egan; Patrick Egan aka Patrick Luke; Gary Collins; Terri Egan aka Terry Ballard aka Terri Toth; John Joseph Egan; Rickey Brooks; Charles Harville; Roy Garrison; Norina Egan; Jean Brennan; Darlene Egan aka Dee Egan; Leroy Egan; Gloria Steppins, Defendants.
Docket NumberNo. CR. S-81-172A-LKK.
Decision Date29 April 1982

538 F. Supp. 237

UNITED STATES of America, Plaintiff,
v.
Daniel VEON aka Danny Veon aka Daniel Dee Veon aka Daniel Martin; Mark Egan; Patrick Egan aka Patrick Luke; Gary Collins; Terri Egan aka Terry Ballard aka Terri Toth; John Joseph Egan; Rickey Brooks; Charles Harville; Roy Garrison; Norina Egan; Jean Brennan; Darlene Egan aka Dee Egan; Leroy Egan; Gloria Steppins, Defendants.

No. CR. S-81-172A-LKK.

United States District Court, E. D. California.

April 23, 1982.

As Corrected April 29, 1982.


538 F. Supp. 238
COPYRIGHT MATERIAL OMITTED
538 F. Supp. 239
Donald B. Ayer, U. S. Atty., Kenneth G. Peterson, Asst. U. S. Atty., Sacramento, Cal., for U. S

Howard Hertz, Berkeley, Cal., for Ricky Brooks.

Michael Stepanian, San Francisco, Cal., for Mark Egan.

William Osterhoudt, San Francisco, Cal., for Patrick Egan.

Andre La Borde, San Francisco, Cal., for Terri Egan.

Nancy Roscoe, San Francisco, Cal., for John Joseph Egan.

James A. Brennan, Sacramento, Cal., for Daniel R. Garrison.

Les N. Harrison, Oakland, Cal., for Gary Collins.

Donald Dorfman, Sacramento, Cal., for Charles Harville.

Richard P. Duane, Berkeley, Cal., for Rodney Glemaker.

538 F. Supp. 240

Christopher Wing, Sacramento, Cal., for Jean Brennan.

John M. Youngquist, San Francisco, Cal., Barry Tarlow, Los Angeles, Cal., for Daniel Veon.

Michael S. Sands and Fern M. Laethem, Sacramento, Cal., for Melvin Laub.

Michael J. Oliver, Pleasant Hill, Cal., for Darlene (Dee) Egan.

Arthur Ruthenbeck, Sacramento, Cal., for John K. Egan.

Gilbert Eisenberg, San Francisco, Cal., for Norina Egan.

J. Toney, Woodland, Cal., for Roy Garrison.

OPINION AND ORDER

KARLTON, District Judge.

In 1970 Congress adopted two criminal statutes. One, the Controlled Substances Act (Title II of Pub.L. 91-513, Oct. 27, 1970) contained a provision directed to continuing criminal enterprises and is commonly known by the initials CCE (21 U.S.C. § 848). The other sought to combat organized crime (Title IX of Pub.L. 91-452, Oct. 15, 1970) and is commonly known as RICO. Both statutes carry a feature rare in American law—namely, a criminal forfeiture of property provision (the CCE provision for forfeiture is codified at 21 U.S.C. § 848(a)(2); RICO's provision is codified at 18 U.S.C. § 1963(a)). In each statute Congress also provided the district courts with jurisdiction to enter restraining orders in connection with property subject to such forfeiture. (See 21 U.S.C. § 848(d) (CCE); 18 U.S.C. § 1963(b) (RICO)). Until recently these provisions were rarely used. (See Report of the Comptroller General of the United States, "Asset Forfeiture—Seldom Used Tool in Combating Drug Trafficking" (April 10, 1981) (hereinafter Report of the Comptroller General)). Accordingly, there is little guidance as to how and under what circumstances such orders are granted. This opinion addresses the issue of what procedures and standards are applicable to the issuance of a restraining order in connection with the CCE. I here explain that although an ex parte order briefly restraining the transfer of property may issue initially, it may not be continued until trial unless the Government proves, at an adversary hearing governed by the rules of evidence, by a preponderance of the evidence that it is likely to prove at trial that the defendant is guilty of a violation of the statute and that the property is subject to forfeiture. Before explaining my reasons for so holding, I will trace the procedural history of the case at bar.

On September 25, 1981, the grand jury of this district indicted Daniel Veon and 18 others, alleging possession of a controlled substance with intent to distribute, possession, and conspiracy. It also in effect alleged that the defendant Veon was the so-called "kingpin" (see United States v. Sperling, 506 F.2d 1323, 1344 (2d Cir. 1974), cert. denied, 420 U.S. 962, 95 S.Ct. 1351, 43 L.Ed.2d 439 (1975)) of a continuing criminal conspiracy (CCE) pursuant to and in violation of 21 U.S.C. § 848. In connection with the latter allegation the indictment alleged that certain real and personal property owned by the defendant was subject to criminal forfeiture pursuant to the provisions of 21 U.S.C. § 848(a)(2)(A) & (B).

On October 2, 1981, the Assistant United States Attorney prosecuting the matter and the DEA case agent appeared in Chambers for the purpose of obtaining an order restraining defendant Veon's transfer of certain interests in substantial real property pursuant to the provisions of 21 U.S.C. § 848(d).

In its ex parte presentation, the United States relied upon certain reports of investigating agents for the IRS, and the DEA. The court issued a restraining order and, on October 6, 1981, issued an order setting the matter for a hearing on October 20, 1981. In the order setting the latter hearing the court suggested that it would treat the ex parte order issued on October 2 as an order akin to a temporary restraining order pursuant to Fed.R.Civ.P. 65 and any order issued subsequent to the upcoming hearing as an order akin to a preliminary injunction

538 F. Supp. 241
under the same rule. See, in general, United States v. Mandel, 408 F.Supp. 679, 682 (D.C.Md.1976) (In considering whether a restraining order should issue pursuant to the provisions of 18 U.S.C. § 1963(b), the rules developed for civil injunctions "may provide some guidance as to the minimal requirements for the entry of a preconviction order in a criminal case.")

On October 15, 1981, a first superseding indictment was returned by the grand jury. Although a hearing in this matter was held on October 20, the merits of the restraining order were not considered or reached. At that hearing it became apparent that the Government and defendant were in substantial disagreement as to both the procedure and standards applicable to any hearing relative to continuing the ex parte restraining order.

The court held a status conference on October 30, 1981, in which it considered various matters concerning the case. Because of the unsettled questions regarding the restraining order, the court determined to have a two part proceeding. First, there would be a hearing on January 13, 1982, for the purpose of considering the appropriate procedure applicable to the hearing, e.g., who bore the burden of proof, what the burden of proof was, and what elements would be required to be proved. Upon disposition of that motion, an evidentiary hearing would be held.

Due to the illness of the Assistant United States Attorney in charge of the case, and the anticipated filing of a second superseding indictment in late March, the United States requested and defense counsel agreed that the procedural hearing should be continued until March 5, 1982. The continuance was granted and a briefing schedule was established. The anticipated second superseding indictment was in fact returned by the grand jury on March 18, 1982.1

The hearing to settle the applicable procedure was held. As that hearing demonstrated, the questions tendered are unsettled and complex. Moreover, because of the historical rarity of a criminal forfeiture proceeding in this country and the relative infrequency of the use of the forfeiture provisions provided by the CCE, little precedent is available to guide the court. I now briefly consider the prior history of forfeitures.

Since at least 1790 this country has banned the use of a criminal forfeiture. See 18 U.S.C. § 3563. Prior to the adoption of the CCE and RICO, this history of a refusal to countenance a criminal forfeiture statute was deviated from only once. In 1862 Congress passed the Confiscation Act which authorized the President to forfeit the property of Confederate sympathizers. See Report of Comptroller General at p. 4. President Lincoln was in doubt as to the statute's constitutionality. See Maxeiner, Bane of American Forfeiture Law—Banished at Last?, 62 Cornell L.Rev. 768, 787 n.109 (April, 1977) (hereinafter Maxeiner). The statute was ultimately upheld by the Supreme Court, not on any theory that criminal forfeitures were generally constitutional, but because the particular statute in issue was considered as constitutionally permitted by virtue of its origin in the War Powers. See Tyler v. Defrees, 78 U.S. (11 Wall) 331, 20 L.Ed. 161 (1871); Miller v. United States, 78 U.S. (11 Wall) 268, 20 L.Ed. 135 (1871); McVeigh v. United States, 78 U.S. (11 Wall) 259, 20 L.Ed. 80 (1871). Since no such claim can be made for the CCE statutes, the Confiscation Act cases can hardly be viewed as providing guidance in the instant action.

Only one other source of forfeiture has been recognized in this country, the so-called civil forfeitures initially emanating from the admiralty law. See Maxeiner, supra, and see also Kandaras, Due Process and Federal Property Forfeiture Statutes:

538 F. Supp. 242
The Need for Immediate Post Seizure Hearing, 34 Southwestern L.J. 925 (1980) (hereinafter Kandaras). Whatever else is true, it is absolutely clear that it was the intent of Congress in 21 U.S.C. § 848 to create a criminal forfeiture statute wholly distinguished from the forfeitures permitted under the civil law. See United States v. Long, 654 F.2d 911, 914 (3d Cir. 1981); see also United States v. Mandel, 408 F.Supp. at 682; Notes of the Advisory Committee on the Federal Rules to the 1972 Amendment to Fed.R.Crim.P. Rule 54

The distinguishing characteristic of a criminal forfeiture provision is that, unlike the in rem character of civil forfeiture (see The Palmyra, 25 U.S. (12 Wheat 1) 14, 6 L.Ed. 531 (1827)), the personal guilt of the defendant is at issue. See United States v. Long, 654 F.2d at 914; United States v. Mandel, 408 F.Supp. at 682; see also Kandaras, supra and Maxeiner, supra. That is to say, given the in rem character of civil forfeiture "questions relating to the culpability of the owner of the goods were simply not an issue. It was the goods which were proceeded against, not the owner." 8A Moore, Federal...

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27 practice notes
  • U.S. v. Lewis, Nos. 83-1705
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • March 22, 1985
    ...omitted.] Long, 654 F.2d at 915. See also United States v. Crozier, 674 F.2d 1293, 1297-98 (9th Cir.1982); United States v. Veon, 538 F.Supp. 237, 245 Given these standards, we do not believe that the district court adhered to the principles of due process. In the government's Motion for Re......
  • Louisiana Pacific v. Beazer Materials & Services, No. Civ. S-89-871 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • February 1, 1994
    ...of the parties relative to the particular issues, and the potential for possessing the relevant evidence. See United States v. Veon, 538 F.Supp. 237, 245-46 (E.D.Cal.1982) ("The general rule is that the proponent of a motion bears the burden of proof"); and see Sierra Club v. Watt, 608 F.Su......
  • Sierra Club v. Watt, No. Civ. S-83-035 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • April 24, 1985
    ...bears the risk of nonpersuasion. "The general rule is that the proponent of a motion bears the burden of proof." United States v. Veon, 538 F.Supp. 237, 245-46 (E.D.Cal.1982). Nonetheless, the question is not quite so easily resolved. Although the issue of non-joinder is not jurisdictional,......
  • Diaz v. INS, No. Civ. S-83-436 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • September 26, 1986
    ...informed decision, reached after consultation and in conformance with the general principles of applicable law." United States v. Veon, 538 F.Supp. 237, 243 n. 3 (E.D.Cal. 1982). Put another way, the exercise of discretion must be founded on factors that are legally relevant to the decision......
  • Request a trial to view additional results
27 cases
  • U.S. v. Lewis, Nos. 83-1705
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • March 22, 1985
    ...omitted.] Long, 654 F.2d at 915. See also United States v. Crozier, 674 F.2d 1293, 1297-98 (9th Cir.1982); United States v. Veon, 538 F.Supp. 237, 245 Given these standards, we do not believe that the district court adhered to the principles of due process. In the government's Motion for Re......
  • Louisiana Pacific v. Beazer Materials & Services, No. Civ. S-89-871 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • February 1, 1994
    ...of the parties relative to the particular issues, and the potential for possessing the relevant evidence. See United States v. Veon, 538 F.Supp. 237, 245-46 (E.D.Cal.1982) ("The general rule is that the proponent of a motion bears the burden of proof"); and see Sierra Club v. Watt, 608 F.Su......
  • Sierra Club v. Watt, No. Civ. S-83-035 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • April 24, 1985
    ...bears the risk of nonpersuasion. "The general rule is that the proponent of a motion bears the burden of proof." United States v. Veon, 538 F.Supp. 237, 245-46 (E.D.Cal.1982). Nonetheless, the question is not quite so easily resolved. Although the issue of non-joinder is not jurisdictional,......
  • Diaz v. INS, No. Civ. S-83-436 LKK.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • September 26, 1986
    ...informed decision, reached after consultation and in conformance with the general principles of applicable law." United States v. Veon, 538 F.Supp. 237, 243 n. 3 (E.D.Cal. 1982). Put another way, the exercise of discretion must be founded on factors that are legally relevant to the decision......
  • Request a trial to view additional results

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